RMD for non-qualified annuities?

[Alto1girl]

My 94 year old dad is receiving several annuity payments from non-qualified annuities to pay for his care. He is NOT required to take these payments under contract and they are NOT lifetime annuity payments. We requested the amount of payout and it is not tied to any RMD amount that I know of. How do I answer TT's RMD question for these annuity payments? They were initially paid for with after-tax money and are not part of an IRA, SEP, 401k, etc.

[macuser_22]

Non-qualified annuities that should have a code D in box 7 on the 1099-R will not ask about RMD's.

[dmertz]

Actually, even though it shouldn't, TurboTax does ask if a code 7D distribution is an RMD.  However, TurboTax only asks this question to determine how much of the distribution is eligible for rollover to a qualified retirement plan, and, since none of a code 7D distribution is eligible for rollover, it doesn't matter how you answer this question.  The code D will prevent TurboTax from asking what you did with the money regardless of how you answer this question.

TurboTax even goes on to ask if the code 7D distribution is a qualified disaster distribution, even though a qualified disaster distribution can only come from a qualified retirement account, and will flag the code 7D Form 1099-R as erroneous if you inadvertently answer that it was a qualified disaster distribution.  Just one of several the traps for the unwary in TurboTax's form 1099-R section where the developers didn't quite think things through and unnecessarily creates a situation where the user can make an entry error.

[Alto1girl]

macuser_22 - Except that TT does ask - even if there is a code 7D.

[macuser_22]

Yea, the code 7 probably does that.  A code D by itself does not ask the question.

[jadcom]

In the 2022 software it still does that.  I do not believe that a non-qualifying annuity, even after death, is required to have an RMD.  If TT is incorrectly asking this question, is it creating an incorrect return?  How are we to respond to the question, "Was this withdrawal and RMD?"

[macuser_22]

Say RMD not required.

[jadcom]

Thanks for the quick reply.  Regrettably, TT does not give me that option.   I get the following dialogue:

Since the person who passed away would have been over age 72 in 2021, (my name) (or they) needed to take a minimum amoun of money out of the account.  This is known as a ... RMD.

 Was this withdrawal an RMD?

O  Yes, some or all of this withdrawal was an RMD.

O  No, none of this withdrawal was an RMD.

To reiterate, this is an inherited, non-qualifying annuity.  Coded 4D in the box 7 of the 1099-R.

Thanks,

jd

[jadcom]

I will add that it produces a very small annual payment used to fund a life insurance premium on the deceased annuitant's grandson.  I never see a dime.

[macuser_22]

None of it was a RMD is th´ same thing as not required.