Updated August 3, 2026. Quick answer: there are 28 distribution codes, and the one thing to understand before reading any of them is that the code describes what your custodian knew, not what you owe. A code 1 is not a tax bill and a code T is not a problem — both frequently mean the payer lacked information you have.
Box 7 is the payer’s claim, not the law
The code in Box 7 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.
In other words the IRS expects the payer to report a distribution as unexcepted when the payer simply does not know, and expects you to claim the exception on your return. That is what Form 5329 is for, and it is the single most useful thing to understand about this form.
All 28 codes
Read from the current IRS instructions. Codes are frequently combined — the instructions specify which pairs are permitted, and a QCD in particular must be reported with code Y first followed by 4, 7 or K.
| Code | What the payer is reporting |
|---|---|
| 1 | Early distribution, no known exception |
| 2 | Early distribution, exception applies |
| 3 | Disability |
| 4 | Death |
| 5 | Prohibited transaction |
| 6 | Section 1035 exchange |
| 7 | Normal distribution |
| 8 | Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2026 |
| 9 | Cost of current life insurance protection |
| A | May be eligible for 10-year tax option |
| B | Designated Roth account distribution |
| C | Reportable death benefits under section 6050Y |
| E | Distributions under Employee Plans Compliance Resolution System (EPCRS) |
| F | Charitable gift annuity |
| G | Direct rollover and direct payment |
| H | Direct rollover of a designated Roth account distribution to a Roth IRA |
| J | Early distribution from a Roth IRA, no known exception |
| K | Distribution of traditional IRA assets not having a readily available FMV |
| L | Loans treated as deemed distributions under section 72(p) |
| M | Qualified plan loan offset |
| N | Recharacterized IRA contribution made for 2026 |
| P | Excess contributions plus earnings/excess deferrals taxable in 2025 or a previous year |
| Q | Qualified distribution from a Roth IRA |
| R | Recharacterized IRA contribution made for 2025 or a previous year |
| S | Early distribution from a SIMPLE IRA in the first 2 years, no known exception |
| T | Roth IRA distribution, exception applies |
| U | Dividends distributed from an ESOP under section 404(k) |
| Y | Qualified charitable distribution (QCD) claimed under section 408(d)(8) |
This table is archived as a citable open dataset: DOI 10.5281/zenodo.21781030 (CC BY 4.0). It carries the IRS’s own explanatory text for every code and the date it was read.
The five that generate almost all the questions
- Code 1 — early, no known exception. Usually fixable on your return.
- Code 2 — early, exception applies. Covers Roth conversions under 59½, the rule of 55, and a 72(t) series.
- Code 4 — death. Used regardless of the age of anyone involved.
- Code 7 — normal. Also where a QCD can hide.
- Codes Q and T — the Roth pair that confuses everyone, and the difference is only what the custodian knew.
Also: code G and the rollover panic · what to do when the code is wrong · the 5498 that arrives after you filed.
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 August 3, 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.