@Lisa3588
Nice thought, but if the entire cost basis had been returned to the taxpayer, then any future distributions would be 100% taxable, not zero percent.
@janicecamp60
Your description of $100K and $5k per years and $95k taxable income sounds very plausible, which makes the zero taxable income this year very odd.
As I noted above, it's as if you told TurboTax that this was a non-qualified plan in the 1099-R interview, would should result in the entire basis being returned in the current year, hence the possibility of tax-free income (it depends on how much basis you still have).
So, let's examine two possibilities:
1. When you were asked if this was a qualified or non-qualified plan, you answered "non-qualified" by mistake. Your OPM plan is qualified, and making the wrong answer here causes you to miss all the questions for the Simplified Method calculation.
2. When you were asked do the screen entitled "Describe the Taxable Amount", you checked off that the amount in box 2a was used in previous years as the taxable amount AND on your current 1099-R, box 2a is empty.
Both ways will incorrectly cause the taxable income to be zero on a $100,000 distribution. Can we check these things before we get even nittier/grittier?
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