The IRS recently updated the Instructions for Forms 1099-R and 5498 to reflect that the 10% tax on early distributions does not apply to distributions for emergency personal expenses, terminally ill individuals, and domestic abuse victims. For Form 1099-R, distribution code 1 should not be used in Box 7 to report these types of early distributions. For Form 5498, repayments made after 60 days for these types of early distributions should not be reported in Box 2. Instead, report these repayments in Box 14a using the new codes added for Box 14b: ‘EP’ for emergency personal expenses, ‘TI’ for terminally ill individuals, and ‘DA’ for domestic abuse victims.
