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1099R Life Insurance Questions

Forum|Forum|5 years ago
May 5, 2021
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So I have a question regarding my life insurance1099R with these info:

Box1: 100

Box 2a: 0

Box 2b: Blank

Box 7: W (charges or payments for purchasing qualified long-term care insurance contracts under combined arrange)

IRA/SEP/SIMPLE: is NOT checked

Box 8 (Other): 100

I have the downloaded/CD version (if that matters)

I have questions regarding the questions that Turbotax asks after filling out the 1099-R and clicking "Continue". After verifying a few things, I get to this question

>>> What did you do with your money from <Life Insurance> Company?

It seems to have two options

I moved the money to another retirement account (or returned it to the same retirement account)/
I did something else with it (cashed out, etc)

It seems both cases could be valid as long as it makes sense.

For example, if I pick option 1, then it will ask me to choose two options:

>> 1. I rolled over all of this money to an IRA or other retirement account (or returned it to the same account)

>> 2. I did a combination of rolling over, converting, or cashing out the money

Of course option 1 seems to make sense to me since the "distribution" is being sent back to the same account to pay for the long-term care (code W)

Clicking continue will return

>> You won't have to pay tax on your $100 rollover from <Life Insurance> Company

Now if I pick option 2 above which is

>>> I did something else with it (cashed out, etc) ---- seems turbotax needs more examples than the "etc"

Click continue and it will ask for the periodic payments

>>> Yes, I got regular payments from this retirement account

>>> No, I didn't get regular payments from this retirement account

Of course, I pick No.

In either cases, there is no additional tax. However, does it matter which options I select?

I moved the money to another retirement account (or returned it to the same retirement account)/
I did something else with it (cashed out, etc)

What is the implication of either selections that I described above?

It seems option 1 makes more sense to me since I actually never saw the money and the insurance company uses it to pay for the long term life care thing.

The only thing is I remember picking option 2 last year for 2019 tax. I picked option 1 this year with the selections I mentioned above.

Appreciate the help!

Best answer by macuser_22

Since you did not keep the money yourself and put it back in the account, it is #1 - a rollover.

macuser_22Answer

Employee

Since you did not keep the money yourself and put it back in the account, it is #1 - a rollover.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

S

statusquoAuthor

So that's what I did in my current 2020 tax, which is

>>> What did you do with your money from <Life Insurance> Company?

I moved the money to another retirement account (or returned it to the same retirement account)/
I did something else with it (cashed out, etc)

I picked option 1 and then option 1 again in the follow up options (which is I rolled over all of this money to an IRA or other retirement account (or returned it to the same account))

But in my 2019 return, I picked option 2 (I did something else...) and then "No, I didn't get regular payments from this retirement account".

Is that a concern that requires 2019 tax amendment?

macuser_22

Employee

That would depend if there was an amount on the 2019 1040 line 4d that you paid an unnecessary tax on.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**