Inherited non qualified annuity not being handled correctly by turbo tax software

[BayAreaBuff]

I received  a 1099-R for an inherited non qualified annuity, which correctly shows the gross distribution, has a taxable amount and fed / state tax was withheld. the IRA box , correctly, is not checked 

After entering all the information, turbo tax double checks that the IRA box is not checked, but the following questions start referring to it as an inherited IRA  and asking about RMDs , birth dates of the parent before or after 1950.  why is it doing that? seems like a software problem? There is no RMD on a non qualified annuity only the tax on the deferred earnings, which the 1099-R details

Can somebody advise ? thanks

[dmertz]

Does this Form 1099-R have code D in box 7 in addition to the code 4?  It should.  If code D is not included in box 7, TurboTax might be inferring that the distribution is from a qualified plan.

Regardless, TurboTax is only asking these questions to determine how much is ineligible for rollover.  Since such a distribution is entirely ineligible for rollover, just indicate that the entire amount is RMD (meaning ineligible for rollover).

[BayAreaBuff]

Thanks for the response.

Yes, the 1099-R has 4D in box 7, and I entered just that way.

There are 2 amounts, the total distribution in box 1 and the amount that is taxable in box 2A. I'll have to run back through the screens and see where it asks about the RMD, but which amount is it looking for?  

I think I understand your point that if the entire amount is marked as a RMD then turbotax adds that income , but then I should use Box 2 

That may make the numbers work , but I'm still concerned when it's filed it's going to refer to it as a Qualified Annuity and create issues with the IRS in an audit.

So, I'm still left with the feeling that your suggestion is a work around to a poorly constructed software design that should be rewritten to have a non qualified IRA by pass all of these RMD  and DOB of the original owner questions. 

[dmertz]

Other than failing to select code 4 for one of the box-7 selections and code D for the other, I don't know of any way you can cause TurboTax to treat the taxable amount of this Form 1099-R as anything other than the amount in box 2a.  The amount that you specify as RMD doesn't matter.  the date of birth of the decedent doesn't matter.  Just confirm that the amount on line 5a of Form 1040 includes the gross amount from box 1 of the Form 1099-R and line 5b includes the taxable amount from box 2a.

[DorisJ]

I agree the software needs to be changed. Non-qualified annuities should have nothing to do with RMD questions. It needs fixed!!!