What if my matching SIMPLE or SEP IRA were Roth contributions?
You should receive a Form 1099-R with Code 2 or Code 7. Code 2 is for an early distribution where a penalty exception could apply. Code 7 is for a normal distribution. Basically, the IRS treats the contribution as a rollover from a traditional 401(k) to a Roth 401(k). The Form 1099-R you receive reports the amount your company matched in your Roth SIMPLE or SEP IRA.
This amount will be included on your tax return as income because it was a Roth contribution meaning that the taxes are paid now, and not paid when you withdraw in retirement.
This amount will be included on your tax return as income because it was a Roth contribution meaning that the taxes are paid now, and not paid when you withdraw in retirement.
