My husband sold/closed his whole life insurance policy a few years ago. He has $25k left in the rider account.. We took out the money without taxes this past fall. We have a 1099-R form where the IRA/SEP/SIMPLE box is checked with box 7 distribution code being "1" (early distribution.) As I am entering all of the info, Turbo Tax wording is "Looks like you took out of your retirement early... etc" and there is a large sum that will be taxed. We knew we'd owe taxes, but why is this being treated as an IRA when it was an extension of a life insurance policy/annuity?
