The 1099R needs to be reported on your return and the distribution from the retirement account will be taxable to you as ordinary income.
There will be no 10% early withdrawal penalty on an inherited retirement account. .
There is no stepped up basis on the retirement account.
To enter this in TurboTax:
To enter pension and annuity Payments (1099-R)
- Click on Federal Taxes (Personal using Home and Business)
- Click on Wages and Income (Personal Income using Home and Business)
- Click on I'll choose what I work on (if shown)
- Scroll down to Retirement Plans and Social Security
- On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button
- Enter the 1099R exactly as you received it.
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