What the Simplified Method is doing is trying to ascertain how much of your distribution on the 1099-R is taxable.
It does this because you may have "basis", that is, after-tax contributions in your pension made while you were employed.
When "basis" is returned to you as part of the distribution, it is not taxed because it already was before it went into the pension.
So TurboTax has to calculate according to the IRS how much of the current distribution is "return of basis", and therefore non-taxable.
This is the point of all the questions.
Is there an amount in box 2a? Is the "Taxable Amount not determined" box checked?
If you worked for only one employer, the pension fund (if the employer kept the same one the whole time) should know the answers to those questions.
And if you never made any after-tax contributions, then the distribution should be taxed as ordinary income (i.e., box 1 and box 2a are the same) - this is not uncommon as many taxpayers don't make after-tax contributions.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
