Annuity adjustment

donnsj — Sun, 08 Mar 2026 21:19:27 GMT

I had $0 withheld for California for a qualified annuity. I had an annual amount distributed for Fed, and RMD was covered. 1099R box 16 is empty. Taxes were withheld to cover the Fed. Do I do anything with the Annuity adjustment section?

Re: Annuity adjustment

ReneV4 — Mon, 09 Mar 2026 17:03:21 GMT

Probably not. The annuity adjustment section is used to calculate how much of your annuity distribution is tax-free because you previously paid tax on the money.

If your annuity is fully taxable (all the money was pre-tax), you generally do not have to do anything with the annuity adjustment section.

Note: You can check your annuity statement for "cost basis". If the amount is zero (0), then the entire amount is taxable.

Also, if your plan is a 401(a), you should not check the box that says "Yes, this is a 403(b) plan." If you do, you are effectively telling the software, "I have a Tax-Sheltered Annuity," which triggers the confusing questions about annuity start dates and cost basis.

Follow these steps to bypass the annuity loop:

On the 1099-R entry screen, make sure Box 7 matches your form (likely Code 7 or Code 1)
Ensure the "IRA/SEP/SIMPLE" box is unchecked (since it's a 401a, not an IRA)
When the software asks, "Was this distribution from a 403(b) plan?", select "No, it's another type of qualified retirement plan"
By selecting No, the software should treat it like a standard pension or 401k distribution and skip the "Annuity" questions entirely

However, if you have after-tax money in the annuity, you must use this section to calculate the exclusion ration for the portion of the distribution that is a return of your own money.

Note: If you do have basis, skipping this section may lead to you paying more taxes because you'll be taxed on your own money.

If Box 16 is empty, that just means that no state tax was paid.

topic Annuity adjustment in State tax filing

Annuity adjustment

Re: Annuity adjustment