IRS Form 1099-R and distribution codes for Gusto Retirement

Form 1099-R is an Internal Revenue Service (IRS) document that reports distributions (withdrawals) from retirement accounts like 401(k)s and Individual Retirement Accounts (IRAs).

If you took any distributions during the year, the form will include:

• The distribution amount(s)

• Whether income tax was withheld from those distributions

• Specific information about the type of distribution

You will get your Form 1099-R by Jan. 31 of the year after you took the distribution. It arrives via paper mail from the custodian who holds your retirement funds—Benefit Trust Company (BTC) for Gusto Retirement accounts.

You will use this form when filing your taxes for that year. BTC also provides the information reported on your 1099-R to the IRS.

A PDF version of your Form 1099-R is also available in your retirement dashboard approximately four to six weeks after the custodian mails the form.

Choose the path that matches how you signed in.

Once you're in your 401(k) dashboard, follow these steps to view and download the PDF tax form.

1. Click Documents from the main menu.

2. Go to the Tax documents section.

3. Click the download button to view or save your document.

Box 7 of Form 1099-R contains one or two distribution codes that tell the IRS what type of distribution you took. The codes vary based on factors like the source and destination of the assets, your age, and whether the distribution is taxable. Your 1099-R will often have two codes listed together.

Standard distributions from your 401(k) plan

You can request a distribution from your 401(k) plan in several situations—like when you turn 59½, experience a financial hardship, or leave the employer sponsoring the plan.

Code

Meaning

1

You took a cash distribution before age 59½ and your provider has not verified if a penalty exemption applies. If you qualify for an exemption, you will need to claim it on your tax return.

2

You took a cash distribution before age 59½ and your provider has verified that a penalty exemption applies. If you qualify for an exemption and a Code 2 was used, you will need to claim it on your tax return.

4

Your beneficiary took a cash distribution after your death.

7

You took a cash distribution at age 59½ or older and are exempt from the early withdrawal penalty tax.

B

The assets are coming from a Roth source under the plan. This code is always used with another code.

G

You are directly rolling over your 401(k) assets to an eligible retirement plan like another 401(k) or an IRA—except when rolling over Roth 401(k) assets to a Roth IRA.

H

You are directly rolling over your Roth 401(k) assets to a Roth IRA.

Examples of standard distribution codes

• You are 45 years old, no longer working for the employer, and take a full cash distribution

  • Non-Roth assets—Code 1

  • Roth assets—Codes 1, B

• You are 62 years old, still working for the employer, and take a cash distribution

  • Non-Roth assets—Code 7

  • Roth assets—Codes 7, B

• You are 45 years old, no longer working, and roll over all assets to your new 401(k) plan

  • All assets—Code G

• You are 45 years old, no longer working, and roll over all assets to IRAs

  • Non-Roth assets—Code G

  • Roth assets—Code H

General corrective distributions

Sometimes money is distributed to fix an issue that arose under the plan. This can include compliance refunds and corrective distributions. While some standard codes above also apply, there is one code specific to corrective distributions that are not related to loans or excess employee deferrals.

Code

Meaning

E

Distributions needed to fix an issue with the plan, including certain testing-related distributions. While includable in income for the year, distributions using Code E are exempt from early withdrawal penalties. These distributions are not eligible for rollover to an eligible retirement plan.

Examples of corrective distribution codes

• Your plan failed its annual compliance testing, and some employee deferrals are being returned to you

  • Non-Roth assets—Code E

  • Roth assets—Codes E, B

• Your plan inadvertently withheld deferrals at a higher rate than you elected, and is returning the overage

  • Non-Roth assets—Code E

  • Roth assets—Codes E, B

Corrective distributions related to excess employee deferrals

The table below covers codes used when refunding excess employee deferrals.

Code

Meaning

8

The excess employee deferral is refunded during the same year. Includable in income for the year and exempt from early withdrawal penalties. Not eligible for rollover.

E

The excess employee deferral is refunded after April 15 of the following year (when permitted). Includable in income for the year and exempt from early withdrawal penalties. Not eligible for rollover.

P

The excess employee deferral is refunded in the year following the year of deferral, but before April 15. Includable in income for the year and exempt from early withdrawal penalties. Not eligible for rollover.

Corrective distributions related to loans

The table below covers codes used for corrective distributions related to 401(k) loans.

Code

Meaning

E

You made excess loan payments, and the excess needs to be refunded. Includable in income for the year and exempt from early withdrawal penalties. Not eligible for rollover.

L

Your loan failed to meet its terms (for example, missed payments or the loan was not fully repaid by the end of the term) and is being deemed distributed. Includable in income and subject to early withdrawal penalties unless an exemption applies. Not eligible for rollover.

M

Your loan was offset, and that offset is a qualified plan loan offset. Includable in income and subject to early withdrawal penalties unless an exemption applies. Eligible for rollover to an eligible retirement plan.

Standard distributions from your traditional IRA

Code

Meaning

1

You took a cash distribution before age 59½, and your provider has not verified if a penalty exemption applies. If you qualify for an exemption, you will need to claim it on your tax return.

4

Your beneficiary took a cash distribution after your death.

7

You took a cash distribution at age 59½ or older and are exempt from the early withdrawal penalty tax.

G

You are rolling over your IRA assets into an eligible retirement plan, such as a 401(k). Transfers from an IRA to another IRA are not reported on a 1099-R.

Standard distributions from your Roth IRA

Code

Meaning

J

You took a cash distribution, are under age 59½, are still alive, and your provider cannot verify you met the five-year waiting period for a qualified distribution. The earnings may be subject to taxation, and the early withdrawal penalty tax may apply. If you met the five-year requirement or qualify for an exemption, you will need to claim it on your tax return.

Q

You took a cash distribution, are age 59½ or older (or have died), and your provider can verify you met the five-year waiting period. The earnings are not subject to taxation, and the early withdrawal penalty tax will not apply.

T

You took a cash distribution, are age 59½ or older (or have died), and your provider cannot verify you met the five-year waiting period for a qualified distribution. The earnings may be subject to taxation, but the early withdrawal penalty tax will not apply. If you met the five-year requirement, you will need to claim the exemption on your tax return.

Other distributions from your IRA

Code

Meaning

5

Assets are distributed from an IRA due to a prohibited transaction.

N

An IRA contribution is recharacterized in the year following the year for which it was contributed.

R

An IRA contribution is recharacterized in the same year for which it was contributed.