If the annuity is paid out because the annuity has reached its annuitization date, do you still pay early withdrawal penalty?

Form 1099 R has box 7 distribution coded 1D, but it was not an early distribution. Money was taken out because annuity contract came to an end.

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Expert Alumni

Feb 12, 2024 12:49:40 PM

Annuitization is the process of converting an annuity investment into a series of periodic income payments. Annuities may be annuitized for a specific period or for the life of the annuitant.

Did you take out all of the money in one lump sum?

IRS Instructions for Forms 1099-R and 5498 (page 15)

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If the annuity is paid out because the annuity has reached its annuitization date, do you still pay early withdrawal penalty?