Box 7 on 1099 R says 7-NONDISABILITY - this is not one of the choices in drop down menu - what do I put in there?

[DoninGA · Accepted solution]

You use code 7 - Normal Distribution in box 7.  There is not such code for 7 - Nondisability.  That is something that OPM enters on the 1099-R and does not comply with the IRS approved codes for box 7.

[cabot601tax]

So, what code I have to fill in when I was asked to fill this 7-Distribution code box?

[DoninGA]

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@cabot601tax wrote:

So, what code I have to fill in when I was asked to fill this 7-Distribution code box?

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If your Form 1099-R shows a 7 - Nondisability you enter a code 7 in box 7 of the TurboTax form 1099-R.

[washby]

My experience as a Tax Expert.  When leaving 1099-R OPM box 2 blank it makes the customer get a higher refund. When box 2 is entered with box 1 info into TurboTax software it reduces the refund. If box 2 is not entered it will provide the taxpayer a higher refund. 

[VolvoGirl]

You have to enter the 1099R EXACTLY as shown on the form.  

[washby]

1099-R from OPM if box 2 is blank or state unknown you have to put in the same amount that is in box 1 into box 2 in order for the pension or annuity to be taxed properly. Leaving box 2 blank will not tax the full amount that is listed in box 1 which make the taxpayer receive a larger refund. 

https://www.opm.gov/retirement-center/

FAQ: If your 1099R Statement Box 2.a for the Taxable Amount is marked as 'Unknown'; this means that OPM did not calculate the tax-free portion of your annuity.   Some of the most common reasons for not calculating the tax-free portion of your annuity:

[dmertz]

If the payer is unable to determine the taxable amount but the participant knows that there is after-tax basis in the plan, the taxable amount must be determined using the Simplified Method because under these circumstances the distribution is not entirely taxable.

[washby]

If 1099-R from OPM is entered with box 2 being blank but on taxpayer 1099-R it states taxes undetermined what do I select in TurboTax for the annuity or pension to be taxed properly?

[dmertz]

It goes on line 5a/b of Form 1040 no matter what you call it.  TurboTax doesn't ask you to distinguish between a pension and an annuity.

if the there is after-tax basis in the plan, for tax purposes what matters is whether the payment are periodic or nonperiodic.  Periodic payments are a proportionate mix of pre-tax and after-tax amounts.  Nonperiodic payments consist only of pre-tax amounts until all pre-tax amounts have been distributed; pre-tax amounts are distributed first.

[AbrahamT]

Assuming that this is the first year that you are receiving this pension, follow these steps to calculate the taxable amount in TurboTax for Windows:

1. Under Retirement Plans and Social Security, Start IRA, 401(k), Pension Plan Withdrawals (1099-R)
2. On Did you receive any 1099-R forms? select Yes.
3. On Let Us Enter Your 1099-R select I’ll type it in myself.
4. On Tell Us Which 1099-R You Have, select CSA-1099-R, Civil Service annuity.
5. The Confirm Payer Information screen will be pre-populated.
6. ON Enter Annuity Information, enter your CSA-1099-R information as it appears on your form. Note that box 9b will show your Total Employee Contributions from the time you began contributing to  your plan.
7. Continue through the screens, making sure to say that you did something else with the money, and that you received periodic payments from OPM.
8. Say that you need to figure out how much of this money I took out is taxable, then enter the Annuity Start Date, the Plan Cost (usually just your contributions to the plan from box 9b, but make sure to read the Learn More section to be sure)
9. On Tell Us About Your Joint Annuity, select No, this annuity covers only me.
10. Enter your age as of the date the annuity (pension) started, and indicate if you are retirement age or not.
11. The taxable portion of your retirement income will be calculated using the Simplified Method . Continue through the section.
12. As previously explained, the taxable portion of your retirement will show on line 5b of your Form 1040.

If this isn’t the first year for the pension, you will need to enter the appropriate information as you go through this section.

[Terry0803]

What do you mean as a Tax expert? 

[DoninGA]

@Terry0803 Do you have a question?

[Terry0803]

Yes on the CSA 1099R it says unknown in box2a and I’m getting mixed answers. Some say if box 7 has the number 7 it’s tax free if you met the plans retirement age etc and others says that’s not accurate?

[DaveF1006]

Yes, the program will take you through steps that will determine the taxable amount of your annuity.

1. Open or continue your return.
2. In the Federal section, select Wages & Income.
3. Scroll to locate Retirement Plans and Social Security.
4. Select Start or Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R)......
5. When it asks what Type of 1099R is it, be sure to mention it is CSA 1099R Civil Service annuity. This is a common mistake that many overlook so i put this in.. See screenshot 1.
6. Record the 1099R as it is on your hardcopy
7. As you go through the questions, be sure to say you need to figure out how much is taxable. See screenshot 2.
8. In the next screen, you will answer specific information about the plan including the annuity start date, plan cost (the amount of contributions you made into the plan), and the number of payments your received in 2023. See screenshot 3.
9. Next screens will ask if this is a joint and single annuity. It will ask your age and if you are under the retirement age for this plan.
10. Once done, your taxable amounts will be determined and reported on your return and hopefully, no error messages.
11. Here are the screenshots. Don't enter these actual numbers as these are here for illustration purposes only.