Form 1099-R Distribution Codes for Defined Contribution Plans

DWC Knowledge Center Article: Getting the Codes Right for a 401(k) Distribution on a 1099-R

Form 1099-R must be sent no later than January 31 following the calendar year of the distribution. The image below highlights the 1099-R boxes most frequently used—and their explanations—for defined contribution plan distributions.

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The following chart provides the distribution codes for Box 7 for defined contribution plan distributions, of which two codes are typically used for each distribution. If more than two codes apply, two 1099-Rs may be required. Common examples include distributions with Roth monies, refunds that include prior and current tax year, and final distributions with a required minimum distribution

You can also view the explanations provided by the IRS hereFor more information on filing Form 1099-R and other plan sponsor deadlines, visit our Knowledge Center here.

Distribution Codes Explanation Used With
Code 1: Early distribution, no known exception.

This distribution is subject to the 10% penalty.

  • 8 (Excess Contributions, Excess Deferrals, and Excess Aggregate Contributions taxable in year of distribution)
  • B (Designated Roth monies)
  • L (Deemed Distribution from Loan)
  • P (Taxable in a prior year of the 1099-R year – the year the refunded contribution was made)

*Non-qualified Roth Distribution (less than 5 years) – use code B and complete Box 11 (Roth clock start), the principal Roth contribution amount in Box 10 and the taxable amount in Box 2A.

DWC Notes: All hardships under the age of 59 1/2 must use Code 1.

Code 2: Early distribution, exception applies.

This distribution is not subject to the 10% early distribution tax. 

This code is used only if the participant has not reached age 59 1/2 and the distribution is one of the following events:

  • A distribution after separation from service in or after the year the participant has reached age 55;
  • A distribution that is a permissible withdrawal under an eligible automatic contribution arrangement (EACA);
  • A distribution made from a plan because of an IRS levy.
  • 8 (Excess Contributions, Excess Deferrals, and Excess Aggregate Contributions taxable in year of distribution)
  • B (Designated Roth)
  • P (Taxable in prior year of the 1099-R year – the year the refunded contribution was made)

*Non-qualified Roth Distribution (less than 5 years) – use code B and complete Box 11 (Roth clock start), the principal Roth contribution amount in Box 10 and the taxable amount in Box 2A.

Code 3: Disability.    None
Code 4: Death.  
  • 8 (Excess Contributions, Excess Deferrals, and Excess Aggregate Contributions taxable in year of distribution)
  • B (Designated Roth)
  • G (Direct rollover to another plan)
  • H (Direct rollover to a Roth IRA)
  • L (Deemed Distribution from Loan)
  • P (Taxable in prior year of the 1099-R year—the year the refunded contribution was made)
Code 7: Normal distribution.

The distribution is after age 59 1/2.

 
  • B (Designated Roth)

DWC Notes: This includes RMDs.

Code 8: Corrective refunds taxable in current year Use for corrective distributions of excess deferrals, excess contributions, and excess aggregate contributions, unless Code P applies (taxable in prior year).
  • 1 (Early Distribution)
  • 2 (Early Distribution—not subject to 10% early distribution tax)
  • 4 (Death)
  • B (Designated Roth)
DWC Notes: Excess contributions are refunds of deferrals due to failure of the ADP test. Excess deferrals are contributions in excess of the 402(g) limit (taxpayer annual limitation). Excess deferrals should only use code 8 if the distribution is processed after April 15th (the participant is double taxed). If the excess deferral is processed timely by April 15th following the calendar year, then code P should be used on the contribution portion of the excess deferral. Earnings on the excess deferrals are always taxed in year of distribution. Excess Aggregate Contributions are refunds of company match or after-tax contributions (non-Roth) due to the failure of the ACP test. Refunds due to employees never eligible for the plan (excess annual additions) should be coded as an 8. All of these corrections must include applicable earnings, these are included in the 1099-R amounts..
Code A: May be eligible for 10-year tax option.

This code is only for participants born before January 2, 1936, or their beneficiaries to indicate the distribution may be eligible for the 10-year tax option method of computing the tax on lump-sum distributions.

  •  4 (Death)
  • 7 (Normal Distribution) 
Code B: Designated Roth account distribution. Use Code B for a distribution from a designated Roth account.  
  • 1 (Early Distribution)
  • 2 (Early Distribution—not subject to 10% early distribution tax)
  • 4 (Death)
  • 7 (Normal Distribution)
  • 8 (Excess Contributions, Excess Deferrals, and Excess Aggregate Contributions taxable in year of distribution)
  • L (Deemed Distribution from Loan)
  • P (Taxable in prior year of the 1099-R year—the year the refunded contribution was made)
Code E: Distributions under Employee Plans Compliance Resolution System (EPCRS). Use for 415 Corrections. None 
Code G: Direct rollover and direct payment.

Use for a direct rollover into another qualified plan or in-plan Roth conversion.

  • 4 (Death)
  • B (Designated Roth)
 In-plan Roth rollover — use G only.
Code H: Direct rollover of a designated Roth account distribution to a Roth IRA.

Use for a direct rollover of a distribution from a designated Roth account to a Roth IRA.

  • 4 (Death)
Code L: Loans treated as deemed distributions under section 72(p). Use for deemed distributions. 
  • 1 (Early Distribution)
  • 4 (Death)
  • B (Designated Roth)

This is not to be used for loan offsets in conjunction with a full distribution where the loan outstanding is already included in the taxable amount. 

Code M: Qualified Plan Loan Asset Use for outstanding loan amounts on distributions for separate of service.
  • 1 (Early Distribution)
  • 2 (Early Distribution - not subject to 10% early distribution tax)
  • 4 (Death)
  • 7 (Normal Distribution)
  • B (Designated Roth)
Code P: Corrective refunds taxable in prior year This code indicates the monies are taxable in a prior tax year (as opposed to Code 8 with the distribution taxable the year of the 1099-R form).
  • 1 (Early Distribution)
  • 2 (Early Distribution—not subject to 10% early distribution tax)
  • 4 (Death)
  • B (Designated Roth)
Code U: Dividends distributed from an ESOP under section 404(k). Use Code U for a distribution of dividends from an employee stock ownership plan (ESOP) under section 404(k). These are not eligible rollover distributions.

IRS Note: Do not report dividends paid by the corporation directly to plan participants or their beneficiaries. Continue to report those dividends on Form 1099-DIV.
 
  • B (Designated Roth)