Box 1 (gross distribution) and Boz 2a (taxable income) are the exact same amounts. It appears the $7000 was taken off the total amount, not taxed, and then the rest was taxed. So the $7000 escaped federal tax. However, even though the $700) was not subject to federal tax, I still lost/paid $7000 of my pension to buy her this annuity/life insurance as per court order of divorce under alimony. Even though the $7000 was not subject to federal tax, I still essentially paid it as alimony in the guise of an annuity/life insurance hybrid. What can you advise?
