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posted May 31, 2019 11:19:51 PM

Lump sum death benefit for annuity contract -do we pay interest?

We are not sure what kind of annuity it is (non-qualified or other).  We received this as a death benefit of my mother. Turbo tax asks about required minimum withdrawal, and we say no, but that is considered to be the less common answer. I am concerned that we may be making an error, either in the answer or the place to put this in our taxed.  Do we owe tax on this death benefit or not?  No taxable amount was on the 1099R form, but we did take it as a lump sum and did not roll it into any other account.

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1 Replies
Level 15
May 31, 2019 11:19:53 PM

Yes it is fully taxable unless you know of a reason that it isn't ... the 1099-R should have the taxable portion in box 2a.  If it is blank and the "taxable portion not determined" is marked then continue thru the follow up questions to let the program determine the taxable portion.

And say yes to it being qualified and yes to the RMD questions.