1099-R Code S: Early SIMPLE IRA Distribution, First 2 Years

An early SIMPLE IRA withdrawal in your first two years, where the additional tax rises from 10 to 25 percent.

What the IRS instructions say

Official meaning, from the Instructions for Forms 1099-R and 5498 An early distribution from a SIMPLE IRA within the first 2 years of participation, under 59 and a half, with no known exception. The 2-year clock starts at the first deposit.

Is it taxable, and does the 10 percent penalty apply?

Taxable as ordinary income, and the early distribution additional tax is 25 percent instead of the usual 10 because the money left in your first 2 years of SIMPLE IRA participation (section 72(t)(6)). The 2 year clock starts the day the first contribution is deposited into your SIMPLE IRA.

Worth knowing: During the 2 year window, even moving the money to a regular non SIMPLE IRA is treated as a taxable distribution. After the window closes, an early withdrawal reports as code 1 with the ordinary 10 percent additional tax, and rollovers to other IRA types open up.

Combinations you might see

Box 7 can carry two codes. With code S, the pairings mean:

SJ: the early first 2 years distribution came from a Roth SIMPLE IRA

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.

← All 1099-R Box 7 codes

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.