I received a 1099-R with a gross distribution amount in Box 1, but zero for the taxable amount in Box 2a. Per the insurance company, the distribution was related to "charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements." Clearly, this distribution (which I did not directly receive) is not taxable. The question Turbo Tax is asking me is "What did you do with the money?" There are two options: 1. Moved the money to another retirement account (or returned it to the same retirement account) or 2. Did something else with it (cashed out, etc.). This distribution is from a life insurance policy with a LTC rider, not a retirement account. Neither option seems like the clear choice. Any suggestions?
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Since the taxable amount is zero, saying you took the cash is a safe bet and better than saying you moved it somewhere.
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