Nontaxable QLAC distribution from Traditional IRA

[garycarols]

Thank you, in advance, for helping me with this . . . .

I received a 1099-R for a QLAC distribution showing the distribution as taxable in Box 2a.  The QLAC distribution is not taxable.  When I prepared my tax return, I entered "0" in Box 2a.  It calculated as nontaxable, but evidently there is a snag.

I get an alert on the "Smart Check," where it states, "Form 1099-R:  Taxable amount should not be zero if there is no prior year excess traditional IRA contribution on line 4 of the IRA information worksheet."  When I look through every single page of the return/worksheets, the only problem I find is under this particular 1099-R is a box labeled "Explanation Statement Smart Worksheet."  A box is checked (I don't know why!) for "Return of prior year excess traditional IRA contributions."  The instructions there say, "If a box is checked on a line below an explanation statement is required for the situation described on that line.  Highlight the checkbox and select the Help to see the required informaiton.  Then QuickZoom to the appropriate explanation statement."  I could not complete these instructions--when I highlighted the checkbox, I could not select "Help."  

I did find (on the initial "Smart Check" message a "Supporting Details" window, which allowed me to type in "Nontaxable QLAC DIstribution"  under Description, and "0" under Amount.  However, when I repeated the "Smart Check," I received the same, original message . . . so I don't think I remedied anything.

There is no excess Traditional IRA contribution here.  I've rechecked my work, and don't know why this came up at all.  

If it does not matter, I'll go ahead and e-file my return.  I don't like any loose ends like this when I'm dealing with the IRS, though!

Thanks again for your help getting me through this!

[ReneV4 · Accepted solution]

Yes. It does matter that you have entered the information correctly.

When completing your 1099-R information in TurboTax, ensure you are filling the boxes in exactly as they are on your Form 1099-R.

It appears you may have not entered the information that was in box a due to your understanding that it was supposed to be a non-taxable distribution.

However, this is not the correct way to input the information because it may result in errors and IRS Notifications.

If this was a non-taxable distribution from your QLAC that incorrectly shows the distribution as taxable in box 2a, you need to contact your financial institution to request a corrected 1099-R.

However, if the distribution was from an IRA to a QLAC, then you can clear the alert by indicating that the distribution was a "rollover".

To report your non-taxable distribution of funds to a QLAC in TurboTax, do the following:

1. Go to Wages & Income
2. Scroll down to Retirement Plans and Social Security and click the down arrow
3. Select IRA, 401(k)...(1099-R) and click Start
4. Click Add a 1099-R
5. Answer the questions regarding the 1099-R, ensuring you complete each box correctly
6. Click on Continue
7. On the, "Tell us if you moved the money through a rollover or conversion", select, "I rolled over...to another retirement account"
8. On the, "Did you roll over all of the $ (Box 1) to another retirement account?" select, "Yes, I rolled over $...to a retirement account"

[garycarols]

ReneV4--Thanks so much for walking me through these steps--yours is exactly the guidance I needed!  🙂