Hi everyone,

One of my clients received form 1099-R for an IRA distribution, with a Code 1 for early distribution - no known exceptions. Box 2a indicating taxable amount is same as Box 1 of total distribution, but Box 2b for "taxable amount not determined" is checked. The taxpayer is younger than 59.5, so should be subject to the 10% penalty. I asked about it, and per my client "My financial person, transfered the cash that was sitting in IRA to CDs. I didn't take the contribution and he said there wouldn't be any tax implications." If these were IRA CDs, not just regular CDs, that statement should be correct, right? I will confirm with her if these were IRA CDs.

And if they were IRA CDs, did the broker not code the distribution right for the 1099?

Thank you