1099-R Code 6: Section 1035 Exchange
You swapped one insurance or annuity contract for another tax free; usually nothing is taxable.
What the IRS instructions say
Is it taxable, and does the 10 percent penalty apply?
None when the exchange qualifies: a clean section 1035 exchange is tax free, and the form should show the full contract value in Box 1 but zero in Box 2a. Tax enters only if the swap fails the 1035 rules or you took cash out alongside the exchange.
Combinations you might see
Box 7 can carry two codes. With code 6, the pairings mean:
- 6W: the exchange included charges for a qualified long-term care rider under a combined arrangement
If this code looks wrong
The IRS matches Box 7 against your return, so start with the payer: request a corrected 1099-R, which is the IRS's standing instruction for incorrect forms. No corrected copy by the end of February? The IRS can contact the payer for you, and Form 4852 substitutes as a last resort. Remember that an indirect 60-day rollover is correctly coded 1 or 7, because the payer cannot see the redeposit; direct rollovers should show G or H, as our rollover guide explains before the paperwork ever gets cut.
Sources: IRS Instructions for Forms 1099-R and 5498; IRS Tax Topics 558 (early distributions), 413 (rollovers), and 154 (incorrect forms). Verified July 2026.
General educational information, not tax advice. Your distribution's taxation depends on your facts; consult a qualified tax professional. ClearChoiceRadar is not affiliated with the IRS or any government agency.