1099R Coded 1D

[mcb39]

Client under 59 1/2 received a 1099R from a Life Insurance Annuity  Payout coded 1D; no known exceptions to penalty.  Federal and State taxes are properly withheld.  

Am I not correct that I fill out the 5329 for relief from the penalty?  Should I use Code 04 or Code 16?  Thanks to anyone who can help me.  If I am correct; last years return will also have to be amended as she payed a very large penalty last year for an early withdrawal from a Death benefit that was not coded 4.

[mcbreck]

That's the correct form but why is the 1099r showing up with the wrong payout code?

If you have a date of death, it would seem maybe code 4 on the waiver is correct IF they died. Include a copy of the death certificate.

[Lee B]

There are so many different annuity variations and riders that it can be difficult to figure out how to handle each one.

You have to refer to the issuer, the original contract and any subsequent modifications.

[mcb39]

16 hours ago, cbslee said:

There are so many different annuity variations and riders that it can be difficult to figure out how to handle each one.

You have to refer to the issuer, the original contract and any subsequent modifications.

They have broken down the part that is taxable and the part that is not.  My question is why should my client under age 59 1/2 have to pay the early withdrawal penalty on an inherited life insurance annuity.

[Lee B]

From my reading, it appears that Qualified and Non Qualified Annuities are sometimes treated differently with respect to the 10 % penalty