What is the IRS Code for an IRA?

These regulations amend the Income Tax Regulations to create a new method for calculating net income on distributions from individual retirement accounts that include returned contributions or recharacterizations (Codes 8 and P in IRS instructions).

One commentator suggested extending this special valuation rule to all IRA assets; however, final regulations did not adopt such an amendment.

Code A

Custodial accounts shall be considered trusts under this section if their holder is either a bank as defined in subsection (n), or another person who can demonstrate to the satisfaction of the Secretary that such person will administer such accounts in line with this section’s requirements.

Use Code G for direct rollover from an eligible retirement plan (such as a qualified plan, section 403(b), or government section 457(b) plan) into an IRA.

Code B

IRAs holding non-marketable securities or closely held investments may be at increased risk of participating in prohibited transactions, so please use code B to report these types of distributions.

Use this code when reporting distributions from designated Roth accounts, per IRS instructions for Form 1099-R. However, this code typically isn’t appropriate for plan loan offset distributions (please use Code L instead).

Code C

Receivers of distributions from individual retirement accounts must include them on their tax return for that taxable year.

Roth IRA refers to an individual retirement annuity established for an employee by their employer. When determining which year any designated nondeductible contributions were made, section 219(f)(3) applies as the basis.

Code D

Individual retirement accounts (other than designated Roth accounts) maintained for their benefit are known as Individual Retirement Accounts.

Individual Retirement Account (IRA), created under an employee qualified employer plan or governmental section 457(b) plan; as well as any distribution from an IRA; this code may also be used to report death benefits (please refer to Form 5329 for instructions).

Code E

Distributions from individual retirement accounts that contain contributions are subject to taxation; this applies both for Roth IRA distributions and SIMPLE IRA distributions.

Distributions generally become part of gross income in a taxable year if received prior to the due date set forth by law for filing one’s return (including extensions). This rule applies equally to qualified plan, designated Roth account and IRA distributions.

Code F

Distribution from a simple retirement account or individual retirement annuity that does not qualify as a Roth account.

Distributions from designated Roth accounts do not incur the 10% early withdrawal penalty and do not count toward gross income; additionally, these distributions do not count towards RMD requirements (for details see Form 5329 instructions).

Code G

Code G should be used when reporting distributions from safe harbor plans such as SEPs (salary reduction simplified employee pension) or withdrawals made prior to age 59 1/2 without incurring an early withdrawal penalty of 10%.

This code should be used for corrective distributions of excess deferrals or contributions and aggregate contributions, except where Code P applies. Furthermore, use it when appropriate when dispersing life insurance contracts and endowment contracts.

Code H

Code H is to be used if the distribution comes from an IRA with investments that contain non-marketable securities and/or closely held investments, which have an increased risk of prohibited transactions.

Use Code H when reporting distributions from a 408(k) plan (commonly referred to as a simplified employee pension), see Plan Loan Offsets in the IRS instructions, as Code L should not be used for these distributions.

Code I

Stock of a corporation not readily tradeable on an established securities exchange is called non-tradable equity.

Use this code when corrective distributions of excess deferrals, contributions and aggregate contributions occur; see Corrective Distributions in the IRS instructions for more details. In addition, use this code if a plan loan offset has to be distributed as part of separation from employment or termination of the plan.

Code J

Box 7 of Form 1099-R will indicate the distribution from a Roth IRA if it contains an R code, meaning no five year waiting period was met and no qualifying exception applied for.

Use code G when a plan participant or IRA owner directly transfers non-Roth QRP or IRA assets directly into an eligible employer retirement plan, including in-plan Roth rollovers.