New York State Non-qualified annuity income

[Traveltrish]

TurboTax is not recognizing that this income does not qualify for the NYS pension exemption.

[LindaS5247]

What type of non-qualified annuity income this is, would determine how it is reported to you. 

If this is an annuity payment from a nonqualified annuity or distribution from life insurance contracts, you would have been issued a Form 1099-R for this income (most common).  The code in Box 7 should be D.

If this annuity payment was from a section 409A nonqualified deferred compensation plans and eligible nongovernmental section 457(b) plans, or commercial annuity, it would be reported on your W-2 in Box 11.

What is box 11 on W-2?

Box 11: This box reports any amounts that were distributed to you from your employer's non-qualified deferred compensation plan or non-government Section 457 pension plan. The amount in Box 11 is already included as taxable wages in Box 1.

If this was reported to you on Form 1099-R check your Form 1099-R entries carefully and make sure you have entered it exactly as shown.

This can be done as follows:

1. Login to your TurboTax Account.
2. Click "Federal" from the left side of your screen.
3. Scroll down to "Retirement Plans and Social Security" and click "Show more"
4. Scroll down and click "Start or Edit/Add" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)

or you can:

1. Sign in to your TurboTax account and open or continue your return.
2. Search for 1099-r (lower-case, with the dashes) and select the Jump to link in the search results.
3. On the Did you get a 1099-R in 2022?
4. Continue through the screens.

If this was reported on your W-2, Box 11 make sure your W-2 was entered exactly as it was shown: 

To check your W-2 entries:

1. Enter W-2 in the Search Bar at the top of the screen.
2. Click the jump to W2 link in the search results and this should take you to the Here's your W-2 info screen if you already entered it.
3.  Just click Edit next to the W-2 listed there and correct all information on next screen. 
4. Continue through until you get to the Do any of these uncommon situations apply to this W-2?
    

Click here for a helpful Q & A regarding pensions in NYS.

Per this Q & A:

Nonqualified Pensions and Annuities in New York State:

Distribution Code D, Box 7 annuity payments for non-qualified annuity distributions from life insurance contracts that may be subject to tax under section 1411, on Form 1099-R; do not qualify for the NYS pension exemption.

If a retired executive receives periodic payments from a deferred compensation plan that isn’t considered a qualified pension plan under the IRC, and the payments were considered wages under IRC 3121(v), and it was intended to be a pension or annuity, it would be reported on Form W-2, Box 11 and would qualify for the $20,000 pension and annuity income exclusion under Tax Law section 612(c)(3-a).

Click here for Publication 939 which discusses general rules for pensions and annuities for tax reporting purposes.

Click here for Form 1099-R instructions.

[Traveltrish]

This was reported on a 1099-r. I entered a “d” for box 7. It still gives the NYS pension exclusion.

[Traveltrish]

When I re-entered Turbo Tax I found that it is now correctly not giving me the $20,000 pension exclusion on NYS. Yay! But it is incorrectly generating an IRS Form 5329 marked with a #12 exclusion. How can I eliminate this form from the e-filing?

[LindaS5247]

To delete form 5329 for TurboTax online follow these instructions:

1. At the top of your page hover over "My Account"
2. Click on "Tools"
3. Click on "Delete A Form"
4. Scroll down and find "Form 5329" and click on delete next to it

To delete form 5329 from TurboTax Desktop follow these instructions:

1. Go into Forms mode by clicking "Forms" in the top right corner
2. Scroll through the forms in your return
3. Select "Form 5329"
4. Select "delete form" box at the bottom of the screen

Click here for information regarding Form 5329 and when it is needed.
 

[Traveltrish]

Thank you so much!!!  This works perfectly.