How to enter an inherited IRA 1099R into Turbo tax and had to start taking her required distributions (we did not want to take the lump sum option)?

[marduino_57]

So my wife inherited a portion of her mothers IRA and she began to take the distributions.  So I've entered the 1099R with the distribution code in box 7 marked 4D.  and turbo tax now thinks my wife is receiving this as a result of her employment.

Was she employed in public safety, is this from her job, was she born before.  Did I enter this wrong? The only information on the 1099R is the from the Payer, the recipent which is my wife's name ABO her mothers name, my wife's TIN.  Box 1, 2a, 4, 7, 14, and 15 are the only ones containing information.

[ColeenD3]

Make sure that the IRA box is checked on the 1099-R screen. These are questions for an employer-sponsored pension, not an IRA.

[Opus 17]

When did your mother-in-law die?  If it was in 2020 or later, the inherited IRA rules have changed substantially.  There are no required distributions, the only requirement is to withdraw all the money and close the account within 10 years.  

The previous rule which said the beneficiary could keep the IRA and withdraw the amount over their lifetime, taking an RMD each year, only applies to accounts where the owner died in 2019 or earlier. 

[marduino_57]

her mother past away in November of 2020 and the  variable annuity was inherited by her and her two brothers. so they each got a third so The Insurance company offered three options for distributions. 

Our choices One was take the full withdrawal. one was to take within 10 years and one was to take over time (RMDs) but that you could always call and take more if you wanted it would just shorten the the time you would draw based on remaining balance.  I also found what I did wrong and go it entered finally.  Just had to go through the questions to see what they were actually asking.

[marduino_57]

Just saw that i just had to worm my way through the questions.  I had it entered as an 1099-R from an IRA.   Thanks.

[dmertz]

The "D" in the code 4D indicates that this distribution is from a nonqualified annuity, not from an IRA.  Marking the IRA/SEP/SIMPLE box on the form would be contradictory to the code D.  Form your most recent post, perhaps you've already realized this.

Why do you think that TurboTax thinks that your wife is receiving this as a result of her employment?  Your wife's  (or her mother's) employment is irrelevant to anything regarding this distribution.

[Opus 17]

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@dmertz wrote:

The "D" in the code 4D indicates that this distribution is from a nonqualified annuity, not from an IRA.  Marking the IRA/SEP/SIMPLE box on the form would be contradictory to the code D.  Form your most recent post, perhaps you've already realized this.

Why do you think that TurboTax thinks that your wife is receiving this as a result of her employment?  Your wife's  (or her mother's) employment is irrelevant to anything regarding this distribution.

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Does a non-qualified annuity still have a "stretch" option, as the plan apparently told this taxpayer?

[dmertz]

Depending on the policies of the annuity company, yes, they can offer a beneficiary an immediate annuity.  The changes made by in the SECURE Act apply to qualified plans, not to nonqualified annuities.