1099R

[mcd1231]

My client received a 1099R for 2022.  My client turned 60 years old in November 2022.  The gross distribution is $20,000 and the taxable amount is $16,696.96.  Box 5 (contribution) is $3,303.04.  The distribution code is 1 (Early distribution with no known exception) D (annuity payment from non qualified annuity). I researched non qualified annuity and it said no 10% penalty if over 59 1/2.  He is getting charged with the 10% penalty.  I am not sure why since he is over 591/2.  Any thoughts?

Thank you in advance

[IRonMaN]

How old was he when he took the withdrawal?  If he met the age requirement when the money was withdrawn, go to form 5329 and use the exception to avoid the penalty.

[rbynaker]

My guess, the distribution was made before May 2022.

[mcd1231]

definitely over 59 1/2

[mcd1231]

i tried tricking the software and making his date of birth 10 years older and it was still taking the 10% penalty

[rcooley25]

What you did in changing his birthdate on the tax return makes no difference. The 1099r still will read code one. In he was over 59 1/2 when the distribution took place then go with Iron Mans subjection.

[rcooley25]

I meant suggestion

[Skylane]

First choice would be to get the issuer to correct the 1099R. Then I like IRonmans suggestion…
if not, I’d use dist code 7 include preparer notes and attach documentation showing the disbursement dates to the efile.

You’ll probably get a CP but you’ll have the documentation to substantiate