What if a Form RRB-1099-R, railroad retirement, shows a code 1 for a 65 year old? Does he have to pay the 10% extra penalty?

[cpn]

Because the code on form RRB-1099-R is 1, proseries is putting the early withdraw penalty of 10%.  The client is 65 years old.

[Just-Lisa-Now- · Accepted solution]

Where do you see a code on a RRB1099R?  Im looking at 2 different clients RRB1099R forms and I don't see any distribution code like a regular 1099R.

[cpn]

the code is at the left top where the soc sec # is. It's the last number following the soc sec. it says code at top.

[Just-Lisa-Now-]

hmmmm….I'll have to look again when I'm in the office, I've always just marked them as Normal distribution.

[Just-Lisa-Now-]

I only have 2 clients that get these from their ex or deceased husbands...I've never noticed the Payee code up by the Claim number, one has a 4 the other has a 1, both of these women are in their 70's, Ive always marked them as a Normal Distribution.

[Larry Z]

Hi Lisa. My First RRB 1099. There is a payee code Next to claim # which is a 1. That doesn't make sense. 7 makes sense like you suggested but can you enter a 7 without it showing on form? 

[Greta]

Proseries also put a 10% penalty. Code 1 every year triggers it. I thought of changing it to 7 myself, or using Form 5329. I have no idea why the Code is a 1!!

[donnadeann]

That number is not a distribution code.  Read the back of the form, very bottom. It states "any amounts shown on your form RRB1099-r are considered "normal" distribution...Use distribution code 7 if you are asked for a code.