An annuity can be a Retirement Account, (some government retirement plans, for instance), where an RMD is required. In an inherited retirement account, if the original accountholder would be over 73, (or was already taking distributions), there may be an RMD requirement, even if the beneficiary is not 73.
Indicate in TurboTax that 'all of the distribution was RMD' if you are asked this question.
Your Code 4D in Box 7 indicates a Non-Qualified Annuity. The amount in Box 5 is what was contributed after-tax, so that amount is not taxable, and that may be reflected in the difference between Box 1 and Box 2a on your 1099-R (if there is an amount in Box 2a). If not, TurboTax is trying to determine the taxable portion of the distribution for you by asking certain questions. It normally would be the difference between Box 1 and Box 5, which would be the Earnings on the annuity.
Here's more info on Non-Qualified Annuities.
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