How do I designate an inherited annuity was from a nonqualified plan when entering the 1099R into Turbo Tax?

[TerriLa]

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.

[Ann2retired]

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?

[1948biddle]

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.

[1948biddle]

Apparently, customer support is not TT's strong point.

[1948biddle]

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.

[TerriLa]

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.  

[Ann2retired]

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?

[TerriLa]

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.

[dmertz]

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.

[dp001]

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

[dmertz]

The developers messed up the question sequence for this situation and TurboTax should not be asking this question when code D is present.  Presently, the only way to get TurboTax to accept this Form 1099-R with codes 4 and D entered is to correct the entry in forms mode of the download version of TurboTax.  You, might be able to get a reasonable result by omitting the code D and answering a question that asks if the distribution is from a nonqualified plan or a qualified plan (it's from a nonqualified plan), but I'm not sure.

[taxfun01]

Following this thread.  Any work arounds yet?  Having exact same problem.  Came across a comment somewhere else that it could be a software update issue on personal computers but I wouldn't know how to update that.  Just want to get taxes done.  Never had this much issue in the past and have used TT for many years.  

[Ann2retired]

If you do not answer the 403b or other qualified retirement plan question in step by step and go to the forms section for your 1099R at issue, after the data entry section at the top of the form, there is a question to "Check if not from a qualified retirement plan or IRA".  If check this box, then go to RMD section and leave this blank as well as the RMD Excess Accumulation section.   The result seems correct in that no additional tax is accessed on the distribution, but there is no way to report the RMD amount and that it was properly distributed.   Furthermore, TT should not produce a Form 5329 if other RMDs were received.   We have an inherited IRA that appears on 5329 despite RMD equaling distribution and no additional tax is calculated.

How do we know that TT programmers are aware of this issue and plan to fix it for our returns to be filed timely and accurately?

[dmertz]

There is apparently a similar problem with code 7D and the individual is age 73 or over that is currently being worked on.  If the fix for that is implemented properly, it would fix both cases.  However, the developers have a history of not looking at the general problem and instead they inappropriately narrow the effect of their correction, so who knows if the fix for the 7D case will correct the 4D case.

[BSCOTTWHILL]

Same issue, same lack of help from support.

Answering the date question is if it was my wife, and not my father-in-law allowed TT to record the non-qualified annuities correctly.  Again, I answer the question AFTER 1951 and it worked.  I have not yet filed but I figured I would pass this along as a work around and see if there are any issues.