Which distribution code refers to a normal distribution?

The distribution code that refers specifically to a normal distribution in the context of tax reporting is Code 7. This code is utilized to indicate that the distribution is a normal distribution, typically referring to a lump-sum distribution from a qualified retirement plan that represents a distribution that does not occur under special circumstances. It’s important for taxpayers to understand these codes as they are necessary for correctly reporting distributions on tax forms, impacting how income is taxed.

Distribution codes are essential for the IRS to identify the nature of distributions, and using the appropriate code helps in determining tax implications correctly. Therefore, recognizing Code 7 as the identifier for a normal distribution is crucial in ensuring compliance with tax reporting requirements and in assessing the correct tax treatment of the distributed amounts.