To designate an inherited annuity from a nonqualified plan you would Go to:
The 1099-R may have a 4 of 7 in Box (7)
If it's a 4 it represents the decedent's death.
If it's a 7 it's a normal distribution
Thank you so much for your reply. When following your instructions step 7. The program asked about RMD's instead of where is this distribution from. I entered none was and RMD, giving me no other options to enter nonqualified?
The payer should have included code D in box 7 if the distribution was from a nonqualified annuity is generally sufficient for TurboTax to treat it as such.
Using TT Home and Business 2024. I have same problem. The program has no place for me to say it is a non qualified plan. Asks if Box 7 is checked. I say NO. Next the program asks about public officer. That is a No. Then TT wants to know if deceased was born before or after Jan 1, 1952. Next screen asks if it is a 403(b) plan. I answered NO, It's another type of qualified retirement plan. There is not a place on the interview or the form to state it is a non-qualified plan. Just wants to know how much RMD was distributed........ Can't get past this to get rid of errors on return.
All employer-sponsored retirement plans are subject to RMD, even if inherited, if the plan owner was of an age to be subject to RMD. As the beneficiary, your plan administrator should make sure RMD is included in your distribution.
When TurboTax asks, choose 'all or part of this distribution was RMD' and enter the RMD amount as equal to or less than the distribution amount.
Here's more info on What is RMD? and RMD FAQ's.
I do not see an answer that actually works to resolve the question "How do I designate an inherited annuity was from a nonqualified plan when entering the 1099R into Turbo Tax?" As stated by someone else previously, when entering the 1099R info, the TT interview ultimately takes you to a window that asks "Was This Distribution From a 403(b) Plan?" You are required to pick from one of two choices: 1. "Yes, this is a 403(b) plan" or 2. "No, it's another type of qualified retirement plan". Neither answer is true. The correct answer is "the distribution (annuity payment) is from a NONQUALIFIED PLAN." How do I designate that?
Thanks for your help. Tedd
Please help. I'm stuck and can't move forward.
Thanks, Tedd
Having the same problem. TT keeps taking me to the question of it being a distribution from a 403b or other qualified plan. Mine is an inherited non qualified annuity, which is why I entered 4D in the distribution code. I tried calling TT and all the person could do was say he would refer it to their IT department. Who knows what will come of that, if anything.
All 1099-R's are entered the same way, and the income is taxed the same. It's still a retirement plan, whether it was yours or someone else's, whether it's employer sponsored or not.
It's the Codes in Box 7 that designate different types, as well as the follow-up questions in TurboTax. If the annuity was purchased with after-tax funds privately, the amount in Box 2a would show the taxable amount.
Here's more info on Inherited Annuities and detailed info on Form 1099-R.
The code entered in box 7 is not bringing up the correct follow up questions. That is the problem.
MarilynG1: You are not answering the question TerriLa and I asked. If you are, it's over our heads. TT requires you to pick from one of two choices: 1. "Yes, this is a 403(b) plan" or 2. "No, it's another type of qualified retirement plan". Neither answer is correct. The correct answer is "the distribution (Nationwide annuity payment) is from a NONQUALIFIED PLAN." Do I check box 1 even though I know it is incorrect? Or do I check box 2 even though I know it is incorrect? Can you tell us specially what steps and boxes we should check to get past this? Or is it like TeriLa suspects - box 7 when coded "4D" is not triggering the correct follow up questions? We really need your step-by-step help on this. It is appreciated. Thanks.
Following - I'm having the exact same problem. I inherited a share of my mom's NQ annuity and TT is asking me about RMDs, which don't apply. Can't get past it.
Please ensure that both Box 7 codes - 4 and D are entered into the area for Box 7 distributions. This should eliminate the RMD questions. If it doesn't, please delete the 1099 and re-enter it, ensuring that both codes are entered. (Sometimes prior answers will get "stuck" and deleting and re-entering should fix this problem.
@TerriLa
@1948biddle
@susieluhu
I have done that. I deleted the 1099, at the request of the person I talked to with TT. I have entered the 4D correctly. This is not my first year with doing this, so I know how to enter the distribution code. Still triggered the same questions.
I have called TT help Feb 20 and was told they are aware of the issue. Signed up to be notified. Nothing yet. I have read responses stating to enter rounded numbers for all. Did not work. Also tried deleting the 1099R and re-entering. Did not work. Have had this nonqualified annuity due to death of parent since 2012 and used TT with no problems until this year. TT for 2023 step by step asked the date person was born on one screen and on next screen said since person who passed away was subject to RMD, was this withdrawal an RMD, if so, was all or part RMD? The current questions do not allow correct responses. I have tried to go to forms and enter correctly, and there is no entry to specify the distribution amount was equal to RMD. When will TT have a fix available for this?
To: TT Expert employee: can you please check with TT management and advise us as to how soon TT will have a fix for this software error? A lot of folks will not be able to complete their taxes on time unless this problem is resolved quickly. That’s not good for TT customers. Nor is good for TT since they guarantee their product’s accuracy.
I spent an hour and a half on the phone with TurboTax expert (he said 35 years). He was nice but unable to resolve the problem even after patching in an additional Turbotax expert. At my urging, he said he would advise TurboTax programing people about the system error in box 7 (4D) but I don't believe him. Mostly, he wanted me off the phone. My case was is CASE #1545750955 in the event you want to refer to it when speaking with TT support. Obviously, TT knows there is a problem with Box 7 4D code but don't want to deal with it. Shame on them.
I spent at least an hour on the phone with them several days ago. He finally said he would send the info, with a screenshot, to their IT department. Looks like after over 10 years of using TT, I am going to have to try to find another software program to use. I am not going to keep spending $70 + a year on software that I cannot rely on anymore.
Is Turbo Tax working on a software update to correct the error when entering 1099R with box 7 code 4D for 4 (death) D (nonqualified annuity)? Currently, when enter the date of birth for person who died, the next screen on step by step asks if this is a 403(b) distribution or other qualified retirement plan. It is neither.
TT 2023 following screen after date of birth question asked if the withdrawal was an RMD, then asked if all or part of distribution was RMD. TT 2024 does not allow this information to be input correctly.
I just called for help again and could not understand the TT person and asked for someone else and she hung up on me. Is TT aware of the error with program for 1099R? When can we expect an update that corrects the issue?
I know a few of us have called and tried to talk to someone about the problem. The person I talked to said he would send the information on to their IT department. I honestly do not know if or when they will address the problem. I had an update today and was hoping it was a correction. It was not. I am almost at the point of writing my $70 off as a loss and going with another tax preparation program from now on.
The code D indicates that the this question shouldn't be asked at all. Regardless of which answer you select to this question, TurboTax will flag it as an error.
The correct entry can only be made in forms mode of the download version by marking none of the boxes on line D of the RMD Excess Accumulation Worksheet. The developers have completely botched the implementation of this worksheet newly added for 2024.
TurboTax Online version started asking the following question on 3/6/25 about a 1099-R distribution I entered for a Non-Qualified Stretch Annuity I inherited (1099-R Box 7 is 4D). Neither of the answers to the question below are correct for this 1099-R. I can’t find a way to resolve this Federal Tax Review error. If I select No, it produces additional errors because the 4D distribution code is for a death distribution from a non-qualified annuity. Fixing the new errors loops back to the issue / question below again. Please post a solution or have the software development team fix this bug so I can file my taxes.
Was This Distribution From a 403(b) Plan?
- Please read below and take any necessary actions.
- The distribution rules are slightly different for 403(b) plans compared to other more common qualified retirement plans, like 401(k)s. (These plans are similar to 401(k) plans, but typically only offered by public schools and certain charities.)
Answer #1: Yes, this is a 403(b) plan
Answer #2: No, it's another type of qualified retirement plan