Updated September 28, 2026. Quick answer: code B by itself only tells you the money came out of a designated Roth account inside an employer plan, a Roth 401(k), 403(b), or governmental 457(b). It does not by itself say whether the distribution is taxable or early: that depends on which other code B is paired with.
Read box by box from the IRS form text: Form 1099-R box 2a, Form 1099-R box 5 and Form 1099-R boxes 10 and 11.
What the IRS tells the payer
From the current instructions, code B is “Designated Roth account distribution”. The full instruction text reads: “Use code B for a distribution from a designated Roth account. But use code E for a section 415 distribution under EPCRS (see code E) or code H for a direct rollover to a Roth IRA.” It may be used with: 1, 2, 4, 7, 8, G, L, M, P, or U.
A Roth 401(k) is not a Roth IRA
The most common mistake here is assuming any Roth-labelled account distribution is automatically tax-free the way a qualified Roth IRA distribution is. A designated Roth account distribution is only tax-free once it is “qualified”: the 5-year holding period is met and you have reached 59½, died, or become disabled. Otherwise the earnings portion is taxable, and code B is typically paired with 1, 2, 4, or 7 to signal which case applies.
The box 10 recapture rule
Form 1099-R’s recipient instructions add a specific note: “If code B is in box 7a and an amount is reported in box 10, see the Instructions for Form 5329.” Box 10 reports an amount allocable to an in-plan Roth rollover made within the last 5 years, and Form 5329 explains a recapture amount that can bring some of that rolled-over money back into the early-distribution calculation if you take it out early.
Which line it drives
Because a designated Roth account lives inside an employer plan rather than an IRA, the distribution is generally reported on the pensions and annuities line of Form 1040, not the IRA distributions line.
Common mistakes
- Treating a Roth 401(k) distribution as automatically tax-free without checking whether it is qualified.
- Overlooking a box 10 entry and the in-plan Roth rollover recapture rule it points to.
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 H, code M, and code U.
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), the 2026 Form 1099-R recipient instructions, the IRS Instructions for Form 5329 (2025), 26 U.S.C. 402A and 26 U.S.C. 408A 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
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How our partner relationships workCode 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.