I funded an annuity with both pre- and after-tax nondeductible Traditional IRA funds (mostly pre-tax). The annuity is now paying out and I want to exclude the after-tax income part of the 2023 distribution. I have a Form 8606 from 2018 (the last time I withdrew Traditional IRA funds) showing my total nondeductible basis remaining in those funds. How do I figure out what amount to exclude from tax for 2023?
You are required to use the simplified method of calculating the taxable portion of your annuity distributions if your distribution start date was after November 18, 1996.
After you enter your Form 1099-R, you will be asked if you need help determining how much of the distribution is taxable, to which you need to indicate that you need help figuring that out:
Then, you will be asked to enter annuity information such as start date, plan cost (your after tax investment), and number of months you received distributions in 2023:
You be asked to enter your age on the annuity start date, and you will be informed that TurboTax calculated your taxable distribution amount by using the simplified method:
Thanks, this is what I needed to see to know how to proceed.
And thanks to TurboTax for putting this question into the process so that I could easily get the right amount that is non-taxable and have the Form 8606 filled out and submitted as part of my return.