RMDs are not required for Federal defined benefit annuities. Yet the Turbo Tax form related to that 1099 R requires that I say whether I've taken it. What to do?

[DS30]

Since the IRS requires the reporting of all RMD payments relates to all qualified plans (and an defined benefit plan falls under this category), the system will still ask about RMD (even if it does not apply to your annuity distributions).

So if you are asked a question about taking an RMD (because you meet the age requirements) from your defined benefit annuity when entering your annuity information, the answer is "yes" that this withdrawal was an RMD and that all the distribution was an RMD (screenshot)

Please click this link IRS - Retirement Plan and IRA required minimum distributions for more information

[bofaman2]

You should be confused.   Turbo asks you if your payment for your Annuity was an RMD.   If you say NO you are threatened by the warning " (This is not common)".   Since this is a common Annuity you vote to believe that "this is uncommon" can not be the answer so you say Yes.  WRONG...maybe.

From what I read elsewhere, if you funded your annuity by buying with funds from a qualified retirement account then the answer is Yes.  If you paid cash out your pocket and it is not qualified then the answer is No, and there are no minimum distributions.   TurboTax should be more clear.  Fortunately I think box 7 is the operative document to make it clear whether or not the funds are qualified.  I do not know why Turbotax does this but they should be advised that their question causes confusion and they should clarify.

[ToddL99]

To clear up the confusion, all defined benefit pension plans (includes civil service & military retirements) must meet the requirements for RMD. Technically, any  monthly pension payment is considered a Required Minimum Distribution (RMD) and the entire amount is an RMD. That is how you need to answer the questions.

When asked  "Was this withdrawal an RMD?", the  answer is "Yes". When asked if all or part of the payment was an RMD,  check "All of this distribution is an RMD." 

 

[bofaman2]

Thanks for the response.  Sorry but I’m still bit confused.  My annuity payment is from an insurance company and is  non-qualified so I entered 7D (Normal distribution for a non-qualified annuity).  I didn’t think my contractual annuity payment from the insurance company in a non-qualified plan was an RMD?  So I wanted to say NO but was warned that is uncommon.  

[DaveF1006]

There are no RMD requirements for non-qualified annuities. Please ignore the message saying it is uncommon because it may be uncommon to most taxpayers but not to you. 

[bofaman2]

Thanks so much for the clarification.    Seems like if the 1099R says 7D  (7=normal distribution, D = non-qualified plan) that the software should not ask if it as RMD.   If so, TurboT may want to make a change or otherwise explain.  But I know there is always an exception when you are dealing with taxes.

[macuser_22]

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@bofaman2 wrote:

Thanks so much for the clarification.    Seems like if the 1099R says 7D  (7=normal distribution, D = non-qualified plan) that the software should not ask if it as RMD.   If so, TurboT may want to make a change or otherwise explain.  But I know there is always an exception when you are dealing with taxes.

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This has come up and has been referred to the developers every year for the last 10 years and they have not seen fit to change it.  I have given up to even report it anymore.