Annuity Distribution Code Tax Impact

Sinsue — Wed, 11 Feb 2026 04:40:46 GMT

Mother in law passed away in 2023, received a 1099-R for an annuity distribution. 1099-R distribution code is 4D; Death, non qualified annuity. The payer originally withheld 10% of the taxable amount in 2a. Knowing that we are in the 35% bracket I fully expect to be taxed another 25% as this treated as ordinary income. When I enter all the form info in TT and get to the Distribution code box and enter 4 and so far the impact to the refund calculator come to a total of 35% as expected. When I input the D the total tax burden grows to almost 39% . Not sure why inputting D changes the tax burden.

Re: Annuity Distribution Code Tax Impact

Sinsue — Sat, 03 Feb 2024 16:31:27 GMT

Found the answer to my question. This drove a change in the Net Investment Income Tax. The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.

topic Re: Annuity Distribution Code Tax Impact in Retirement tax questions

Annuity Distribution Code Tax Impact

Re: Annuity Distribution Code Tax Impact