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AZDonS
New Member

1099-R for IRA being treated as an annuity

I am trying to assist my elderly father-in-law to prepare 2019 taxes for him and my recently deceased mother-in-law. They both have federal pensions and each has an IRA. The 1099-Rs for the pensions and his IRA worked fine. But my mother-in-laws IRA distribution is being treated like an annuity instead of an IRA and I can't calculate the basis as I did for his, generating an 8606. Her's kicks to a Simplified or General Rule calculation as if it is an annuity, He has been filing both for years with 8606 Forms for both IRAs without a problem, I am frustrated that I can't do what should be a simple operation.

3 Replies
dmertz
Level 15

1099-R for IRA being treated as an annuity

The behavior of TurboTax depends on whether or not the IRA/SEP/SIMPLE box is marked on the Form 1099-R.  If annuity is an IRA annuity, the IRA/SEP/SIMPLE box should be marked on the Form 1099-R provided by the payer and you need to edit this 1099-R in TurboTax to correct your marking of the IRA/SEP/SIMPLE box to agree with the marking on the Form 1099-R provided by the payer.

AZDonS
New Member

1099-R for IRA being treated as an annuity

The IRA/SEP/SIMPLE is not checked on the 1099-R. There is a taxable amount on line 2a and the box on 2b for Taxable amount not determined is not checked. However, a 2019 year end statement from her plan shows it to be a Traditional IRA. And TurboTax wants to treat it as an annuity, not an IRA. The info entered in TurboTax 1099-R form matches the one from the company.

dmertz
Level 15

1099-R for IRA being treated as an annuity

The IRA/SEP/SIMPLE box not being marked on the Form 1099-R provided by the payer indicates that the annuity is not an IRA annuity (unless the payer prepared the form incorrectly, which is unlikely) and is not to be included anywhere on Form 8606.  Perhaps the annuity is in some other kind of qualified retirement account such as a pension or an annuity in the federal TSP.  However, if box 7 of the Form 1099-R includes code D, it indicates that it is a nonqualified annuity.

 

If box 2a of this Form 1099-R without the IRA/SEP/SIMPLE box marked shows an amount and box 2b Taxable amount not determined is not marked, that's the amount that the IRS will expect to see included on Form 1040 line 4d unless explanation is provided as to why this amount is incorrect.  If box 2a is blank and box 2b Taxable amount not determined is marked, the taxable amount must be determined using the Simplified Method or the General Rule depending on whether the annuity is a qualified or nonqualified annuity.

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