If you turned 59.5 at any time during 2020.....That's a bug....right now you have to say NO to the question about receiving any of it under age 59.5 in order for it to post properly in the 2020 software....but the IRS isn't doing anything with any tax files before 12 Feb, so there is time for TTX to correct it . See the discussion here...when it was first identified:
___________________________________________
@Katie_B You do have someone at TTX working on this ???
If you turned 59.5 at any time during 2020.....That's a bug....right now you have to say NO to the question about receiving any of it under age 59.5 in order for it to post properly in the 2020 software....but the IRS isn't doing anything with any tax files before 12 Feb, so there is time for TTX to correct it . See the discussion here...when it was first identified:
___________________________________________
@Katie_B You do have someone at TTX working on this ???
Thanks! Will monitor for fix but in interim will answer no on 59 1/2 question.
@SteamTrain I was unable to locate your email in the SWC inbox but no worries, I believe I have the information I need and am looking into it now. Thank you!
Just an FYI: Here's the text I posted in my email about that on 1/9/2021. No indication in my SENT box that it bounced.
______________________
"Moderators.:
Review the following discussion:
______________________________________
THE Online 2020 software (Premier in my case) is treating a military (non-qualified) 1099-R, code 7 as being subject to penalty.
….BUT only in the tax year they turn 59.5. None of it should be penalized.
IF the same person is (say) 56, with the same 1099-R…no penalty is assigned.
Desktop 2020 Premier software appears to treat it properly…no penalty.
Steamtrain"
@SteamTrain Still working on this, but I did want to check in with you. I do get the same result, but in my testing I noticed that it seems to happen specifically for me when box 2a is checked for "Taxable Amount Not Determined". If I uncheck that box and put $0 in box 2, the penalty seems to go away. This may or may not work as a workaround, let me know if it does and if you get the same result in TurboTax Online. Thanks!
Nope....You can't do that. Having the zero makes all the income Federally non-taxable (removed from line 5b in the 1040) and it is Federal taxable income. and who knows what that would do on the various state tax returns....I think some use box 2a, and some use box 1 on the 1099-R.
And it happens on my test return without that box being checked.....it would not be checked on most all Military Retirement 1099-R forms (guess there could be exceptions) .
As a "workaround" just saying "No" to the did you receive any before age 59.5 is safer and simpler.
Read you loud and clear, thanks for verifying. Do you happen to have a token number for that file? Hope your weekend is going well!
Where would I find token number? Tried to email by replying to notification email but received trasmittal failure reply.
@mjdominiqu wrote:
Where would I find token number? Tried to email by replying to notification email but received trasmittal failure reply.
Using the TurboTax online editions, click on Tax Tools on the left side of the program screen.
Click on Tools
Click on Share my file with Agent
My Token number is 711534
______________________________
Currently set to "No" to the question about receiving any $$ before age 59.5
Military 1099-R listing in table is "DFAS"
State form attached is for NC, so I imagine that software must be installed in whatever system checks the flow & data.
Excellent, thank you! I have forwarded this to the team and will get back with you once I hear from them.
Just remind them that it's the "Online" software only.
I didn't see it as a problem with the Desktop software. I just checked again after the recent update.
AND....Yes, the desktop software still asks the question about receiving any of the $$ before age 59.5...but it doesn't apply any penalty to a supposed DFAS 1099-R as long as box 7 is a "7" and you can answer either YES or NO with no penalty effect...since it's immaterial in this situation.
(as long as it's tagged as a non-qualified plan on the next page)
Reading the answers to this concern it appears it is focused on tax year 2020. I'm being asked if received early distributions on my military retirement in 2021. I turned 59 and 1/2 during 2020. Do I answer no to the question in turbo tax? My wife is not be asked this question because she has not reached this age.
1) The prior answers are from last year's Q&As...but still apply to this year (though 1 year added on to the year dates). (see added comment about Desktop vs Online software at the end)
2) As long as it is a Military pension from DFAS.
3) As long as box 7 contains a "7" for the distribution code.
4) then you can go ahead, and answer No ...because the 59.5 year rule doesn't apply to military pensions from DFAS......as long as you mark that 1099-R as noted in step 5 below>
5) you also need to make sure you tag that particular military DFAS 1099-R as being "From a Non-qualified Plan" on one of the interview pages after the main form entries, that asks about this being either a Qualified, or Non-qualified .
6) IF properly marked as noted in #5, there will be no 10% penalty applied, but it is still subject to normal Federal taxes (states vary).
__________________________
Later Notes. Tested the "online software.....For "Online" software users, for a Military DFAS pension 1099-R, the user must answer "No, this was not an early withdrawal" in the interview follow-up pages, as long as box 7 had a code "7 " in it. If you answer Yes (even if true), the Online software will improperly apply a 10% early withdrawal penalty.
(Desktop users could answer either Yes or No as long as step 5 above is marked properly)
I added some additional comments for "Online" software users, after testing both the Desktop and the Online software setups.
If you are receiving a military pension in regular payments each month you should follow the steps outlined by @SteamTrain. Below are images from TurboTax Online version to assist.
Yes, select the appropriate form, but I'm 99% sure a DFAS military pension comes on a standard 1099R, not a CSA- or CSF- form. So, people need to be very careful to look at their actual form title, and not to select the wrong form type. I'm hoping they don't use the selection you showed in your picture.
(Yeah, probably wasn't your intent to have them make that selection... but "Select the appropriate form", could be interpreted either as a general comment, or as an instruction to make the particular selection you showed...which was what I first thought.)