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1099-R Code W: Long-Term Care Rider Charges

W

Your policy's cash value paid for its long-term care rider; reported but generally not taxable.

What the IRS instructions say

Official meaning, from the Instructions for Forms 1099-R and 5498 Charges or payments for qualified long-term care insurance under combined arrangements against an annuity or life policy's cash value.

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

Generally not taxable. When your annuity or life policy's cash value is used to pay for its qualified long-term care rider, the charge is reported for information but is not income; instead it reduces your investment in the contract, your basis. Box 2a is typically zero. The tradeoff is that a lower basis can mean slightly more taxable gain if you later surrender the contract.

Worth knowing: Code W looks alarming with a dollar figure in Box 1, but it is usually a nontaxable internal charge, not money paid to you. It is how the law lets a policy fund its own long-term care coverage tax free.

Combinations you might see

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

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.