RBMunkin,You wrote, The return was DONE except for that one item. Very simple return. Just a W2 and this 1099-R. The refund grew a lot just by clicking the Box 7 "early distribution" option. With that choose there is NO penalty or tax on the Roth IRA early distribution. I can't figure out why. I Googled and don't see any exception for his simple case. And even if there were, there was no exception information included in the return in Turbo Tax.I'm not a tax expert, but what was in Box 2A? From what I can tell, this is the important part of a 1099-R. What's more, the IRA administrator can put an X in Box 2B to indicate that the taxable portion is unknown. This gives the administrator the option to not maintain a taxable cost basis and leave it up to your friend to figure out.Finally, the 10% penalty only applies to taxable earnings on his contributions that were withdrawn. If he didn't earn much, the penalty might not be much either - even though he may have withdrawn everything. Also, your friend and/or the administrator are probably counting the earnings as the last thing withdrawn, which means he may have just withdrawn principal from his original contributions.- Joel
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