to: Federal Taxes
Wages & Income
Retirement Plans & SS
IRA, 401(k), Pension Plan Withdrawals (1099R)
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The TT 1099-R screen is lengthy because there are many different types of retirement distributions with different tax rules. This is why TT insists on asking you so many questions. Even the smallest error will prevent TT from computing the correct taxable amount.
The number or Letter shown in Box 7 is critical. This is called the "distribution code". What's entered here, along with the answers to the questions, will determine how the distribution is taxed.
1099-R’s come in two versions. In the first version both box 1 and box 2a contain #’s. This means that the plan custodian HAD the information to determine the taxable amount and did so. Enter both #’s, (even if they are the same), and TT will put the amounts on Lines 12a & b of the 1040A or Lines 16a & b of the 1040.
In the second version, box 2a contains the word “UNKNOWN” and box 2b is checked. This means that the plan custodian DID NOT have the information to determine the taxable amount. Once you indicate that (1) the funds are not from an IRA and (2) are not being rolled into another IRA account, TT will ask you when you started getting the payments and what is the “plan cost”; that is, the total amount that you contributed over the entire life of this plan.
TT will then ask you (1) if the annuity is covers more than one person and (2) your age when the payments started. Based on your answers to all of these questions, TT will compute the taxable amount that should have been in box 2a.
You only have to enter all of this information once. TT will include it in the data that it carries over each year.