topic 1099-R Box 7, code 7 Plan Cost in Retirement tax questions

1099-R Box 7, code 7 Plan Cost

jeff_anderson2002 — Sun, 16 Mar 2025 01:13:00 GMT

I am trying to enter in a 1099-R form from my Mt. Teachers Retirement pension. I retired a few years ago prior to turning 59 1/2 years old and have all the prerequisites from having to declare "early withdrawl" I turned 60 during this tax year. My 1099-R box 7 code went from a 2 to 7. In doing so, the turbotax tax form is asking me to enter a plan cost. I have seen a couple explanations of plan cost: one said "it is what you have contributed to your plan prior to your first distribution (my first pension check), the second explanation said "plan cost is what you have contributed after your first distribution. Which one is correct?

Re: 1099-R Box 7, code 7 Plan Cost

SharonD007 — Sun, 16 Mar 2025 01:28:19 GMT

The plan cost is the total of after-tax contributions. It should be in box 9b. If you have no cost in your plan, your distributions are fully taxable.

For information on the taxability of retirement payments, refer to the IRS Topic no. 410, Pensions and annuities for more information.

Re: 1099-R Box 7, code 7 Plan Cost

jeff_anderson2002 — Sun, 16 Mar 2025 02:25:27 GMT

If I have no entries in box 9b, is my plan cost $0?

Re: 1099-R Box 7, code 7 Plan Cost

MarilynG1 — Sun, 16 Mar 2025 02:32:12 GMT

Yes, most teacher retirement plans are funded with pre-tax payroll deductions, so there were no after-tax contributions (so no plan cost). Be sure to choose the 'Source' of the distribution correctly in the follow-up questions. If a City/State/County, etc. retirement fund, it may not be taxable in your state.

Here's more info on Tax Tips for Retirement.

@jeff_anderson2002