Updated September 29, 2026. Quick answer: Box 7 of Form 1099-Q can carry a distribution code from 1 to 6, but the IRS instructions say the payer may, and is not required to, include one. Code 1 is an ordinary distribution, codes 2 and 3 mark excess Coverdell contributions, and codes 4 to 6 mark disability, death and prohibited transactions.
A code is optional
The instructions say: “For the current year, you may, but are not required to, include one of the following distribution codes in box 7.” They also allow shorthand: “You may abbreviate as needed.” The 1099-Q instructions read here are the April 2025 revision, which the IRS marks for use for tax year 2025 and later until a superseding revision is issued. So a blank Box 7 is not an error.
The six codes
| Box 7 code | IRS list label | What the IRS says the code is for |
|---|---|---|
| 1 | Distributions | “Distributions (including transfers) to the recipient and any direct payments to a qualified educational facility. However, use code 2 or 3 for withdrawals of excess contributions.” |
| 2 | Excess contributions plus earnings taxable in current year | “Withdrawals of excess Coverdell ESA contributions and earnings unless code 3 applies.” |
| 3 | Excess contributions plus earnings taxable in prior year | “Withdrawals of excess contributions from a Coverdell ESA. Advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the excess contributions were made.” |
| 4 | Disability | “Distributions you made after the recipient was disabled (see section 72(m)(7)).” |
| 5 | Death | “Payments to a decedent’s beneficiary, including an estate.” |
| 6 | Prohibited transaction | “Prohibited transactions. See sections 408(e)(2) and 408(e)(4) for similar rules that apply to a Coverdell ESA.” |
Where codes 2 and 3 come from
The Box 2 instruction ties the code to earnings: “If the amount in box 2 includes earnings on excess contributions, enter distribution code 2 or 3 (as applicable) in box 7.” Those codes concern Coverdell ESAs. Box 2 itself is explained on the Boxes 1, 2 and 3 page.
The direct-transfer case
A 529 to ABLE transfer is reported with code 1: “Report these by checking box 4a and using distribution code 1 in box 7.” See the Box 4 page.
Common mistakes
- Treating a blank Box 7 as missing information. The instructions make the code optional.
- Reading code 5 as the account owner’s death. It is a payment to the beneficiary of a decedent, including an estate.
- Mixing this list up with Form 1099-SA. Its Box 3 has its own six codes with different meanings.
Related: 1099-Q Boxes 1, 2 and 3: Gross, Earnings and Basis, 1099-Q Box 4a and 4b: Trustee-to-Trustee Transfers, 1099-SA Box 3 Distribution Codes 1 to 6 Explained, and the Form 1099-R Box 7 codes.
Every box in one place: the 1099-SA and 1099-Q boxes table. If your withdrawal came from an IRA or 401(k), see the Form 1099-R Box 7 codes.
Figures verified against the IRS Instructions for Form 1099-Q (Rev. April 2025) and the IRS About Form 1099-Q page, with the revision line of the 1099-SA and 5498-SA instructions, on September 30, 2026.
Sources
- IRS, Instructions for Forms 1099-SA and 5498-SA (Rev. December 2026): https://www.irs.gov/pub/irs-pdf/i1099sa.pdf
- IRS, Instructions for Form 1099-Q (Rev. April 2025): https://www.irs.gov/pub/irs-pdf/i1099q.pdf
- IRS, About Form 1099-SA: https://www.irs.gov/forms-pubs/about-form-1099-sa
- IRS, About Form 1099-Q: https://www.irs.gov/forms-pubs/about-form-1099-q
Source: the IRS instructions for the filer of each form, read at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.