Form 1099-R box 5

[Franchesca]

Hello, client provided a 1099-R for 2019 with an amount in box 5. Is the amount on that box subject to the early withdrawal penalty? The box 5 is the difference between boxes 1 and 2a. Thank you! 

[Just-Lisa-Now-]

Box 5 is what they contributed, thats why Box 2a is lower than box 1.

Just enter the 1099R int the worksheet as its shown.

[Franchesca]

Thank you. I entered the 1099-R as its shown, however, the system is only assessing the 10% penalty based on the amount reported on box 2a (taxable amount), which is the difference between Box 1 (Gross Distribution) and Box 5. The form shows Code 1D in box 7. Would that mean that the plan administrator is reporting a non-taxable amount of the distribution in box 5? My first thought was that since Code 1D was shown of Box 7, the full distribution would be taxable as an early distribution since the customer has not reached age 59 1/2 and subject to the 10% penalty. Would you agree with this?

[Just-Lisa-Now-]

Yes, only the taxable amount would be considered an early withdrawal. 

The portion they contributed (Box 5) would be non taxable (it was their own after tax money) and not subject to penalty.

[Franchesca]

Thank you. What about the Roth IRA qualified distribution rules related to publication 590-B about the additional 10% tax on early distributions? I believe this is an early distribution. Would you please help?