1099R box 7 code 1 - qualify for down payment

[parvitstax]

If I have a 1099R with Code 1 in Box 7 does this qualify for a down payment exclusion? 

I would think if the funds were used for a down payment there would be a different code. Is there a different way to enter this to qualify for the penalty exclusion?

[Skylane · Accepted solution]

Assuming you're talking about an exception on form 5329 for first home purchase, yes up to 10K. 

[IRonMaN]

The investment company can't vouch for how the money is spent.  If they qualify for an exception you would use form 5329

[Just-Lisa-Now-]

The financial institution doesn't care what you used it for.

If its an IRA you can exclude the first 10,000 from the penalty for early withdrawal if it was used for a first time home purchase, but its still taxable income. 

If its  a 401k, no penalty exclusion.

You use Form 5329 for the penalty exclusion.

[IRonMaN]

If I knew everybody was going to get here at the same time I would have suggested car pooling.

[BobKamman]

Everyone got here at the same time but no one asked if this was an IRA (not a 401k), or mentioned that it's code 09 on Line 2 of the Form 5329.  

[parvitstax]

That is a good follow up.

Non SIMPLE vs SIMPLE Distribution 

*Code is automatically generated by ProSeries 

[Just-Lisa-Now-]

I mentioned it needed to be an IRA, but didn't ask if it was.

[IRonMaN]

Not that I really feel the need to justify things to Bob, but I did use the caveat of "if they qualify for an exception".  We should all be thankful that Bob is always here to point out things that nobody else would have ever thought of.

[rbynaker]

Yeah, shame on Lisa for actually providing both possible answers without first asking the question.

[qbteachmt]

Here's a nice reference table:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...