1. An inherited nonqualified annuity does not have RMD
2. Cost basis input is determined by your box 2a selection.
3. Let's do it together.
Your 1099R should have box 7 with a code D for nonqualified annuity and code 4 for inherited. Let's go through the steps:
- Open your return to the federal income
- Select the 1099-R and edit
- taxable amount -if box 2a has no amount or needs to be determined, the program will ask about cost basis. If 2a has a number and you select to use it, the program will not ask about the basis.
- continue to Enter the form,
- No Public Safety Officer
- Age of person - before of after Jan 1, 1952.
- select no or yes
- select 403b plan
- RMD, enter zero
- continue
Reference: Publication 575 (2023), Pension and Annuity Income states regarding RMD:
For this purpose, a qualified retirement plan includes:
A qualified employee plan,
A qualified employee annuity plan,
An eligible section 457 deferred compensation plan, or
A tax-sheltered annuity plan (403(b) plan) (for benefits accruing after 1986).
Reduced tax rate for excess accumulations.
The additional tax rate for distributions that are less than the RMD amount (excess accumulations) is reduced to 25% for tax years beginning in 2023 and after.
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