IRS Announces New Roth IRA Distribution Codes for Form 1099-R
The IRS has announced new and changed distribution codes for use in box 7 of Form 1099-R for 2001. Announcement 2000-86, 2000-44 IRB 456.
The new changes in the Form 1099-R distribution codes were caused by Notice 2000-30, 2000-25 IRB 1266, which specified a new method for reporting recharacterizations and reconversions.
New and Changed Codes
The announcement states that taxpayers can use only the following codes for Roth IRA distributions.
- Code N: A new code to be used for reporting a recharacterized IRA contribution for 2001.
- Code R: Changed to be used for reporting a recharacterized contribution for 2000.
- Code J: Changed to be used for reporting "Early distribution from A Roth IRA no known exception."
- Code T : A new code to be used to report "Roth IRA distribution exception applies."
Code J cannot be used with Code 1 (early distribution no known exception). With Code J, a taxpayer must use Code-5-Prohibited Transaction; Code-8-Excess Contributions plus earnings taxable in 2000; or Code-P-Excess Contributions plus earnings taxable in 1999.
Code T can only be used with Code 5, 8, or P. Code T cannot be used with Code-2 Early Distribution with exception; Code-3 Disability; Code-4 Death; or Code-7 Normal Distribution.
Effect on Companies
Financial services institutions must use these new codes when completing Form 1099-Rs for distributions relating to Roth recharacterizations and reconversions.