Updated September 28, 2026. Quick answer: code R reports the same recharacterization mechanic as code N, moving a contribution and its earnings between a traditional and a Roth IRA, except the original contribution was made for 2025 rather than 2026. Like code N, it is a relabelling that the trustee reports on Form 1099-R with zero in box 2a, and it is not taxable.
What the IRS tells the payer
From the current instructions, code R is “Recharacterized IRA contribution made for 2025 or a previous year”. The full instruction text reads: “Use code R for a recharacterization of an IRA contribution made for 2025 and recharacterized in 2026 to another type of IRA by a trustee-to-trustee transfer or with the same trustee. Note: A participant is allowed to recharacterize an IRA contribution made for a prior year when the IRS provides tax relief by postponing the tax filing due date, for example, due to a federally declared disaster.” It may be used with: None.
Which year, and why it matters
The only difference between N and R is timing: R applies when the contribution being recharacterized was made for the prior tax year. The instructions extend the same disaster-relief flexibility to this code: a prior-year excess or recharacterization can still be corrected when the IRS postpones the filing deadline for a federally declared disaster.
Which line it drives
Following the same Form 1040 exception that covers code N, the total distribution reported with code R goes on line 4a, and the instructions say to see Form 8606 and its instructions to figure the amount to enter on line 4b.
Common mistakes
- Reporting the box 1 amount as current-year taxable income. Box 2a is zero for a recharacterization.
- Skipping Form 8606: the Form 1040 instructions send a recharacterization to that form to figure the amount on line 4b.
Box 7 is the payer’s claim, not the law
The code in Box 7a records what the custodian knew when it cut the cheque. It is not a ruling on what you owe, and the IRS instructions say so in as many words. On code 1 the instruction to payers is to use it “even if the distribution is made for medical expenses, health insurance premiums, qualified higher education expenses, a first-time home purchase…” and a list of other genuine statutory exceptions.
Related codes worth reading alongside this one: code N, and code 8.
Every code in one place: the Box 7 table. If yours looks wrong: how to fix it.
Figures verified against the IRS Instructions for Forms 1099-R and 5498 (2026) and the IRS Instructions for Form 1040 (2025) on September 30, 2026.
Sources
- IRS, Instructions for Forms 1099-R and 5498 (2026), Table 1, Guide to Distribution Codes: https://www.irs.gov/instructions/i1099r
- IRS, Instructions for Form 5329 (2025): https://www.irs.gov/instructions/i5329
- IRS, Instructions for Form 1040 (2025): https://www.irs.gov/instructions/i1040gi
Code meanings are read from the IRS Instructions for Forms 1099-R and 5498 (current edition, tax year 2026), Table 1, Guide to Distribution Codes, at irs.gov on September 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS is the right place to confirm anything consequential.