topic box 7 1099 r in Retirement tax questions

box 7 1099 r

maine54 — Mon, 22 Feb 2021 21:05:52 GMT

My 2020 1099 r has a gross amount of $4,600 in box 1, $4,300 in box 2a, taxable amount and $300 in box 5 representing my contributions. In box 7 there is a "P" which is for 2019 contributions that are taxable in 2019? This 1099 r represents payments from a defined benefit plan where I was employed in the 1980s. So, there were no contributions in 2019. I have read that I can simply change the code in box 7 from a "P" to an 8. Is that correct?

Re: box 7 1099 r

ThomasM125 — Tue, 23 Feb 2021 22:35:12 GMT

If you use the code 8, it will show as taxable in the current year as opposed to being applied to 2019. Although this may be the correct treatment, the IRS will get a copy of the form 1099-R and expect to see the income in 2019.

So, you may end up with the correct tax treatment on your 2020 tax return if you change the code, but it would be better to get a corrected form 1099-R, as that may prevent problems you may encounter down the road with the IRS.

Re: box 7 1099 r

maine54 — Mon, 01 Mar 2021 19:07:59 GMT

The answer really doesn't make sense to me. This is an annuity so that would mean I would have to amend my 2019 return, not claim any income in 2020, and then when I get my 1099R for in 2021 it would have and the same P code is in box 7 again and I would have to amend my 2020 return. That is a circular file and amend process that just can't be the way that this is intended to work.

Re: box 7 1099 r

KathrynG3 — Mon, 01 Mar 2021 19:32:23 GMT

There are some counterintuitive rules regarding retirement distributions depending on their tax preferred treatments.

See 2020 Publication 525: Taxable and Nontaxable Income, page 11, first column: Excess distributed to you.

If the distribution was for a 2019 excess deferral, your Form 1099-R should have code P in box 7. If you didn't add the excess deferral amount to your wages on your 2019 tax return, you must file an amended return on Form 1040-X. If you didn't receive the distribution by April 15, 2020, you must also add it to your wages on your 2020 tax return.

In the 2020 Instructions for Forms 1099-R and 5498, page 18:

P—Excess contributions plus earnings/excess deferrals taxable in 2019.

See the explanation for Code 8. The IRS suggests that anyone using Code P for the refund of an IRA contribution under section 408(d)(4), including excess Roth IRA contributions, advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the contributions were made.

You will need to get a copy of the 2019 tax rules if you do not already have the CD/Download in order to file the amended return.

For more information, see: How do I amend a 2019 return in TurboTax?

Re: box 7 1099 r

maine54 — Mon, 01 Mar 2021 20:20:02 GMT

Thanks Kathryn. But this doesn't make common sense to me. Let me restate the question. I received a 2020 1099R with $4,600 in box 1, $4,300 in box 2 and $300 in box 5 and a "P" in box 7. This is an annuity from a defined benefit plan that I will receive until death. The contributions that I made go back to the 1980s. I didn't receive any excess contributions in 2019.

If I have to amend my 2019 return, I 'll have to amend my 2020 return when I get when 2021 1099R, and for each year there after. File and amend for every year...doesn't make sense.

Please advise. Thanks.

Re: box 7 1099 r

SamS1 — Mon, 01 Mar 2021 21:23:03 GMT

That coding is incorrect. The P code is an IRA code, not a pension plan code. You need to contact your plan administrator and get the 1099R corrected. It should be a 7, assuming you're over 59 1/2.

Re: box 7 1099 r

maine54 — Mon, 01 Mar 2021 23:51:10 GMT

Thank you!! Normal distribution makes sense.