I have strong doubts about the reply given, at least per the 2023 version of IRS Pubs 525 and 939. I can find no distinction made about the General Rule between (non-qualified) annuities and retirement plans. Instead, the salient distinction is between periodic payments and non-periodic (withdrawals). The latter are not eligible for amortized cost recovery until all earnings are withdrawn, then return of invested capital takes place.
Pub939 states: "In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments." Also: " An annuity is a series of payments under a contract made at regular intervals over a period of more than 1 full year. They can be either fixed (under which you receive a definite amount) or variable (not fixed). You can buy the contract alone or with the help of your employer. Note. Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted."
Unless someone can point out a specific IRS statement that excludes standard annuities from using the General Rule, I plan to use this approach and make an adjustment to the Taxable Amount that I believe was inaccurately reported in the 1099-R by the payer (insurance company).
