For entering 1099-R info, TurboTax asks: "Was This Distribution From a Qualified Plan?". It also adds that "Most plans are qualified plans." But it also says that "Non-Qualified Plans include: Life insurance policies (if distribution is full payment)."
I don't understand why TurboTax includes that added condition. What difference does it make "if distribution is full payment"? What if the distribution is NOT "full payment"?
In my case, the payer (Prudential Insurance) includes the following statement on my 1099-R: "This form 1099-R reports taxable gain on distributions from your Prudential contact including dividends credited. When total dividends credited over contract life exceed total premium paid, excess is considered gain and tax reportable."
These dividends are reported to me annually. So they are NOT a "full payment distribution". They are ongoing annual payments. So, since these annual distributions are not a full payment, is this life insurance policy still considered a Non-Qualified Plan? Is it OK to ignore the added condition that TurboTax makes regarding the distribution being a "full payment"?
