DMarkM1
Expert Alumni

Retirement tax questions

Only the interest and earnings on your wife's portion of the distribution from a non-qualified joint annuity would be subject to the 10% early withdrawal penalty.  

 

Two items at play here.  Typically each 1099R for a distribution from a joint annuity is prorated by the ownership percentage (usually 50% for spouses).  You should verify with your plan administrator.  

 

Second, for a non-qualified annuity only the earnings/interest distributed would be taxable and penalized for the early withdrawal.  Box 2 on the 1099R should reflect this.  Box 5 should also have an amount as per the instructions for form 1099R (see below).  

 

Generally, for qualified plans, section 403(b) plans, and nonqualified commercial annuities, enter in box 5 the employee contributions or insurance premiums recovered tax free during the year based on the method you used to determine the taxable amount to be entered in box 2a.

 

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