Incorrect code for Box 7 in 1099-R

Forum|Forum|6 years ago
March 10, 2020
2 replies
25 views

My financial adviser said I could take an early distribution since I'm on Disability. When I got my 1099-R the distribution code is showing as 1. Shouldn't it be a 3? If so, how do I get it corrected? Thanks

Not A Product Question

Best answer by MinhT1

You do not have to get your 1099-R corrected. You can indicate in TurboTax that your distribution was for permanent disability and the early withdrawal penalty will be waived.

After you have entered your form 1099-R, on the summary page, click Continue and follow the TurboTax interview until you arrive to a page titled Did you use your IRA to pay for any of these expenses?. You can enter the amount of the distribution in the box Permanent disability (see screenshot).

MinhT1Answer

Level 15

You do not have to get your 1099-R corrected. You can indicate in TurboTax that your distribution was for permanent disability and the early withdrawal penalty will be waived.

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TxCatLady1Author

Level 3

Thank you, thank you, thank you. I was actually hoping that would be the answer, but I was too nervous to try before asking the question.

macuser_22

Alumni - Champ

Code 3 is normally used for a disability pension when an employee leaves work because of a disability. Other financial institutors can use code 3, but do not in most circumstances, because they so not have the resources to verify and obtain the doctors records to prove the disability (and they have no reason to take on that responsibility) , so it is up to the taxpayer to claim it themselves on their tax return and prove it to the IRS if questioned.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**