Box 7 contains a code that classifies the type of distribution, which directly influences whether the money is subject to ordinary income tax, an additional penalty, or neither. Understanding this code is necessary for accurately completing the federal income tax return. The Form 1099-R is the official record for distributions received from pensions, annuities, retirement plans, profit-sharing plans, and Individual Retirement Arrangements. Box 7 on Form 1099-R uses alphanumeric codes. Ideally, to tell the IRS if your retirement distribution is: Common codes include 7 (Normal), 1 (Early), and G (Direct Rollover). So you just opened your mail and found a Form 1099-R. You probably see a bunch of numbers.