January 31, 2022
IRS Distribution Codes—Why Did I Receive Two 1099-Rs?
In 2021, the Retirement Funds of Georgia reviewed all distribution codes for pension benefit recipients. Upon review, we found several individuals who required an update to their distribution code (Found in Box 7 on the 1099-R). In most cases, the distribution code was set to 7 instead of the code it should have been assigned (2, 3, or 4 – see chart below). For this reason, these individuals will receive two 1099-R forms for 2021. Both received 1099-R forms are required to be filed according to IRS regulations. (If you were to add the two forms together, the corresponding totals would equal the correct year-to-date total).
Members whose distribution code is set to 2 will receive two 1099-R forms for the year that they reach age 59 ½.
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Distribution Codes |
Explanations of Box 7 on IRS Form 1099-R |
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2 – Early Distribution |
The member has not reached age 59 ½
In the month that member surpasses age 59 ½ their distribution code will automatically update to 7 – Normal Distribution. A member will receive two 1099-R forms in that tax year. |
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3 – Disability |
The member has been granted a disability retirement by the Board of Commissioners for the plan
The member may not be subject to the 10% additional tax. |
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4 – Death |
Used regardless of the age of the member to indicate payment to a decedent’s beneficiary or survivor (including an estate or trust) |
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7 – Normal Distribution |
Used if the member is at least 59 ½ |