Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Retirement Income; Form 1040, Lines 15-16

Other Retirement Income Issues

Premature Distributions

A premature distribution is an early withdrawal from a pension fund, for purposes other than retirement, by a taxpayer who is under 59½. Early distributions can be subject to an additional tax of 10 percent. The tax applies to the taxable portion of the distribution or payment.

If the distribution code in box 7 is 1, the taxpayer will be subject to the additional 10 percent tax, unless an exception applies.

Certain early distributions are excluded from the early distribution tax. If the distribution code in box 7 of Form 1099-R is 2, 3, or 4, the taxpayer does not have to pay the additional tax. The exceptions for excluding early distributions from the additional tax are covered in more detail in the lesson, Other Taxes.

Portion of Form 1099R with 2 in box 7.