Why does TT is assume my 1099-R is for an early withdrawl from an IRA instead for pension payments paid before 59 1/2? Rule of 55 Section 72(t) permits this w/o penalty.

Forum|Forum|1 year ago
March 12, 2025
2 replies
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I retired at 59 and started receiving pension payments. TT is saying "Let's check... did you withdraw this retirement money early? Early means withdrawing retirement money before turning 59 1/2. Early withdrawals like this are taxed an additional 10%." This is not true per rule of 55. Or is it thinking this is an IRA w/d?

Best answer by DoninGA

@jgimpel1969 wrote:

Box 7 code is 7. SEP/Simple is UNchecked.

(The 1099-R actually doesn't even show that IRA/SEP/SIMPLE field, oddly).

If you separated from your company at age 55 or older and you are under the age of 59 1/2 in 2024 then the plan administrator should have entered in box 7 a code of 2—Early distribution, exception applies (under age 59½).

DoninGA

Employee

What is the code in box 7 of the Form 1099-R? Did you check the IRA/SEP/SIMPLE box on the 1099-R?

jgimpel1969Author

Box 7 code is 7. SEP/Simple is UNchecked.

(The 1099-R actually doesn't even show that IRA/SEP/SIMPLE field, oddly).

DoninGAAnswer

Employee

@jgimpel1969 wrote:

Box 7 code is 7. SEP/Simple is UNchecked.

(The 1099-R actually doesn't even show that IRA/SEP/SIMPLE field, oddly).

ThomasM125

I entered a pension distribution such as you mention in TurboTax and there was no penalty assessed for early withdrawal. I left the IRA box unchecked and used code "7" in box 7 indicating it was a normal distribution. Please let us know what you did that deviated from that so we can help you better.

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