Q. We were both over 60 when we withdrew the money. So what code do I use when I enter the 1099R into TT?
A. Code 7, normal distribution, is what Schwab should have put in box 7 of the 1099-R.
Q. I still do not understand then the purpose of 709 and the lifetime exclusion?
A. If you make a gift of more than the annual limit ($16K in 2022), you must file form 709 to notify the IRS of the reduction in your lifetime exclusion.
Q. It seems that is intended for this somehow?
A. No, for two reasons; 1. you didn't exceed the limit and 2. there is an exception for the direct payment of educational expenses for certain relatives.
