qbteachmt
Level 15
02-28-2024
04:28 PM
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Find out what the event was, so that you can understand Code 2. Code 2 itself relates to there being a known exception the early distribution penalty, but doesn't really tell you more. And the account type or plan type matters. This is from the 1099-R directions, which is what you are following up on:
"Use code 2 only if the employee/taxpayer hasn't reached age 59 & 1/2 and you know the distribution is:
- A Roth IRA conversion (an IRA converted to a Roth IRA).
- A distribution made from a qualified retirement plan or IRA because of an IRS levy under section 6331.
- A section 457(b) plan distribution that is not subject to the additional 10% tax. But see Section 457(b) plan distributions on page 12 for information on distributions that may be subject to the 10% additional tax.
- A distribution from a qualified retirement plan after separation from service in or after the year the taxpayer has reached age 55.
-
A distribution from a governmental defined benefit plan to a public safety employee after separation from service in or after the year the employee has reached age 50.
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A distribution that is part of a series of substantially equal periodic payments as described in section 72(q), (t), (u), or (v).
- A distribution that is a permissible withdrawal under an eligible automatic contribution arrangement (EACA).
- Any other distribution subject to an exception under section 72(q), (t), (u), or (v) that is not required to be reported using code 1, 3, or 4.
*Used with code (if applicable): 8, B, D, or P."
"I am sure it is not 0.00"
In most cases it is fully taxable. If there is basis, your taxpayer should provide that info to you.
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