1099 R Inherited Roth IRA Q or T in Box 7

When you inherit a retirement plan from a deceased spouse or relative, depending on the type of plan and how the deceased made contributions, you may have to pay income tax on the plan's distributions.

A Form 1099-R will usually report a "Q" or a "T" in box 7 for an inherited Roth IRA account.

"Q" means that the holding period of five years for qualified distributions has been met, so the amount is not taxable as it is a qualified distribution.

"T" informs the IRS that the holding period was not met, but the distribution is exempt from the penalty for early withdrawal because it has been paid to a beneficiary. The initial withdrawn contributions are tax-free; however, distributed earnings are taxable.