Should the taxable amount on form 1099-R reflect the amount my son paid for an annuity?

larryesh · ‎June 3, 2019

Should the taxable amount on the 1099-R be the full amount of the gross distribution? My son died July, 2018 and I was the beneficiary of an annuity he set up. He paid $14,000 in 2001 and the distribution was for $58,000. He paid taxes on the $14,000 already so shouldn't the Box 2A amount be $44,000?

JulieR · ‎June 3, 2019

Special rules apply when the inherited beneficiary is a non-spouse. If the beneficiary is a non-spouse, the taxes depend on the payout choice. If the non-spouse beneficiary chooses a lump sum payout option, they will owe taxes on the interest earned on the original premium. They will not have to pay income tax on the premium. If the beneficiary chooses to continue with annuity payments, each payment will be taxed individually. Choosing this option spreads out the tax liability over a longer period of time.

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Should the taxable amount on form 1099-R reflect the amount my son paid for an annuity?

Retirement tax questions