1099-R distribution code 1.

Where the IRS says to use code 1

In Table 1, Guide to Distribution Codes, the IRS tells payers to use code 1 "only if the participant has not reached age 59½" and the payer does not know whether the exceptions covered by codes 2, 3 or 4 apply. Code 1 is the default for a withdrawal taken early from an IRA, 401(k), 403(b) or similar plan.

There is one trap in the wording. The IRS says to use code 1 even when the money went to medical expenses, health insurance premiums, qualified higher education expenses, a first-time home purchase, a qualified reservist distribution, a qualified birth or adoption distribution, an emergency personal expense distribution, a distribution to a domestic abuse victim, a terminally ill individual distribution, a qualified disaster recovery distribution or a qualified long-term care distribution. The payer usually cannot confirm how you spent the money, so those cases arrive with code 1 and you claim the exception yourself.

Code 1 is also required when a taxpayer aged 59½ or older modifies a series of substantially equal periodic payments before the end of the 5-year period that began with the first payment. That is the one situation where an older taxpayer sees code 1.

What you do with it on your return

The Instructions for Form 5329 split this into two cases. If code 1 is correctly shown in box 7 of all your Forms 1099-R and you owe the additional tax on the full amount shown on each form, you do not have to file Form 5329. You report the 10% additional tax directly on Schedule 2 (Form 1040), line 8.

If you meet an exception but box 7 does not show it, or the exception covers only part of the distribution, you file Form 5329. Enter the amount you can exclude on line 2 with the exception number (01 to 23), or 99 if more than one exception applies. Exception 12 covers a distribution wrongly coded 1, J or S when you were 59½ or older; line 2 takes the amount you received at that age.

The estimator on this page does the arithmetic from Form 5329 Part I: the taxable amount from box 2a, minus the part covered by an exception, times 10%. It is separate from regular income tax, which still applies to the taxable amount.

Combinations you may see

Table 1 lists codes 8, B, D, K, L, M and P as the codes that may share box 7a with code 1. Two you will meet most often: 1 and 8 for a traditional IRA that was revoked or closed with earnings paid out, and 1 and L or M when a plan loan is treated as paid out. A pair outside that list is not valid, and the IRS says the payer then has to issue more than one form.

Worked example

Dana, age 44, withdraws $15,000 from a traditional IRA and uses $10,000 of it as a first-time home purchase. Her 1099-R shows $15,000 in box 2a and code 1. She files Form 5329 and enters $10,000 on line 2 with exception 09 (IRA distributions for a first home, up to $10,000). The additional tax is 10% of the remaining $5,000, or $500. Regular income tax is separate and still applies to the $15,000.

Where this code sits in the full table

This page covers one row of the IRS guide. The full 1099-R distribution codes lookup lets you search every code, and the neighbors of code 1 are worth a look: 7, G, Q, 2, 8, J, T, B.

Sources

Retrieved November 1, 2026.

• IRS, Instructions for Forms 1099-R and 5498 (2026): Table 1, Guide to Distribution Codes, and the box 7a, box 2a and Specific Instructions text on code 1.
• IRS, Instructions for Form 5329 (2025): Part I, additional tax on early distributions, the exception list (01 to 23) and Roth IRA distribution rules. This is the tax year 2025 edition, the latest read; the 2026 edition is published later.
• IRS, Instructions for Form 1040 (2025): Where IRA, pension and rollover amounts are reported.

Form 1099-R changes for 2026: box 7 becomes box 7a, and the IRS adds boxes 7b, 7c and 7d. On forms for earlier years the code is in box 7.