She had an annuity, TIAA, that is being cashed out. One more withdrawal made in 2020 will complete it. I am confused about how to apply it, it is not to be taxed?
This response had a wonderful comment that solved my problem. I had a "G" in Box 7, which means the 1099-R simply was deposited into another file, which my advisor told me was done for the last 10 years anyway, Due to her age this was new for us. Thank you! However, Turbo screwed it up because they added the money to our income, and then wanted me to redo our taxes. Not happy with that, but I am glad I printed the returns before I asked to enter the 1099-R. I just filed a 1040-X to fix the problem. Thank you.
Any pre-tax annuity (the money is deposited pre-tax, by the employer, the employee, or both) is always subject to regular income tax when it is withdrawn. Additionally, if the withdrawal is not "qualified", it will be subject to a 10% penalty tax for early withdrawal. A withdrawal is qualified if the taxpayer turns age 59-1/2 (or older) in the year the withdrawal happens. Assuming this is a 403(b) (since it is a TIAA account) the withdrawal will also be qualified if the taxpayer separated from service with the sponsoring employer in the year they turned age 55 or older. There may be other circumstances where an early withdrawal is qualified, such as disability, but I would need to know more about the details.
When you enter the 1009-R, it probably has either a code 1 or code 7. A code 7 is a qualified withdrawal, meaning you pay regular income tax on the money. Code 1 means it is an early withdrawal and the sponsor does not know of any exceptions that would exempt you from the extra 10% penalty. When you enter a 1099-R with code 1 in turbotax, Turbotax will ask if you a covered under any exceptions to the penalty, you can check a box if you think you are qualified.
You said "cashed out" so I assume this is not a rollover to a different retirement plan.
In Turbotax, just enter the 1099-R and follow the instructions. Why are you confused?
This response had a wonderful comment that solved my problem. I had a "G" in Box 7, which means the 1099-R simply was deposited into another file, which my advisor told me was done for the last 10 years anyway, Due to her age this was new for us. Thank you! However, Turbo screwed it up because they added the money to our income, and then wanted me to redo our taxes. Not happy with that, but I am glad I printed the returns before I asked to enter the 1099-R. I just filed a 1040-X to fix the problem. Thank you.
@casey4tax wrote:
However, Turbo screwed it up because they added the money to our income, and then wanted me to redo our taxes.
Where do you see that? If you are looking at the income summary then that reports only the gross box 1 income as it should, not taxable income.
A code G rollover should be on the 1040 form line 4a with the word ROLLOVER next to it and a zero on line 4b (the taxable amount).