1099-R and 1411

[s00lin]

I moved a non-qualified annuity to another company. The original company mailed me the check which was given to my financial advisor and deposited within 60 days with the new company, however I have now received a 1099-R showing a gross distribution of $66,000. Box 2a is blank (taxable amount). The Distribution code is 7D. Will I need to pay any tax on this? The check was erroneously made out to me instead of the new company. What is 1411? Please advise as soon as possible! Thank you!

[dmertz · Accepted solution]

The 2024 Form 1099-R indicates an ordinary distribution from the nonqualified annuity, not a section 1035 exchange, so the amount shown in box 2a of the Form 1099-R is the amount that is taxable that adds to your AGI on your 2024 tax return.  According to the annuity provider, you simply cashed out (surrendered) the annuity.  In this case box 2a is blank, so if box 2b Taxable amount not determined is not marked, it means that box 2a should have a zero in box 2a and should not be blank.  (Many payers mistakenly believe that a blank box 2a is the same as having a zero in box 2a.)  If box 2b Taxable amount not determined is marked, you'll need to determine your investment in the contract and subtract that from the amount in box 1 to determine the taxable amount.

The purchase of the new annuity is an entirely independent transaction (other than the fact that you made the purchase using the cash received from surrendering the original annuity).

1411 of the section of the tax code that imposes Net Investment Tax on the taxable amount of an investment.