Helping my sister with taxes. We received an inheritance in 2023 from our aunt. We were listed as a beneficiaries on several annuities - these were not IRA related. We both cashed those annuities out and paid applicable taxes. She took the proceeds from the annuities and combined those funds with a cash payout from the estate. A new annuity was opened. In 2024, she received a distribution from the annuity. The distribution code on the 1099R shows as 4D (death/nonqualified annuity). I feel the distribution code should be 7 - normal distribution? (FYI she is not retired, whereas I am. I am using my funds to supplement my monthly SS income, thus not having to touch any retirement related accounts). Do you agree?
We were also listed as beneficiaries on a retirement account. It is our understanding that we must continue taking the RMD yearly but also must use the funds within a 10-year period. She is taking 1/10th of the balance annually thus taking more than the calculated RMD. This 1099 R shows a distribution code of 7. I think this should be coded with a 4 - death. I am currently taking only the required minimum and delaying tax implications. My distribution code is showing as a 4. Any idea which is correct?
Thank You in advance.
