Incorrect Code on 1099-R

Forum|Forum|4 years ago
March 21, 2022
3 replies
8 views

I received notice of a settlement of an ERISA lawsuit from a 401k plan I used to participate in. I decided to take the distribution in cash since I’m over 59.5. When I received the 1099-R, it was coded as an early distribution. How do I fix this?

Best answer by dmertz

You can claim an Other reason exception to the early-distribution penalty. Go to Other Tax Situations -> Additional Tax Payments -> Extra tax on early retirement withdrawals and enter the amount in the Other box.

JohnW152

Level 15

If you think the code is erroneous, you should contact the payer to have a corrected Form 1099-R issued.

Don't change the distribution code on your 1099-R when you're entering it into TurboTax. If the code that you enter for the 1099-R doesn’t match what the IRS has on record for the same 1099-R, this will raise a red flag with the IRS.

dmertzAnswer

Level 15

Beach4Author

Level 2

Thank you!

Evesings

Level 2

Interesting and I wonder if it’s the same ERISA settlement I received. Mine is coded “4.00” which of it refers to “4” means death. Wrong of

course.

Reaching anyone to correct the 1099-R is impossible. I’m beginning to wish I had opted out!

DianeW777

Level 15

If you are at least 59 1/2, you should follow the steps provided by @dmertz to use an exception to the penalty if necessary. Your code 4 however would eliminate the 10% penalty or a code 2 would also eliminate any early distribution penalty without any extra steps.

@Evesings

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Evesings

Level 2

Thank you for your quick response!

My taxes are typically very simple and I have been doing them on my own for 30+ years pretty

much using TurboTax for as long as it’s been available. So the suggestion of “consulting my tax advisor” is pretty unhelpful and that’s what I’m sure I will be told if I could actually reach anybody who handled the 1099R distributions in this case

Seems then that I will need to use the code 4 (4.00 is how it actually reads) as provided.

Thank You again!