To qualify, it would have to be reported as a 1035 exchange with a code 6 in box 7. if you rolled this over into another annuity account, you would need to contact the issuer to the 1099R to send a corrected 1099R reflecting a Code 6 in Box 7.

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C

Coleen3

Employee

Just enter your 1099-R exactly as it appears. You should have a code 6 in Box 7.

Here's how to enter your 1099-R in TurboTax:

Open (continue) return if you don't already have it open.
Inside TurboTax, search for 1099-R or 1099R (lower-case works too) and then click or tap the "Jump to" link in the search results.
Answer Yes on the Your 1099-R screen, then click or tap Continue.

What is a 1035 Tax Free Exchange?

A 1035 tax free exchange is the I.R.S. tax code that allows for the rollover of a non-qualified annuity (or transfer of a life insurance policy) to a new annuity or life policy of equal or greater value. Capital gains and/or income taxes will not be realized from this type of transfer when completed properly.

There are only three examples of a 1035 exchange:

Annuity to Annuity
Life Insurance to Life Insurance
Life Insurance Cash Value to Annuity

The I.R.S. does not allow for a 1035 exchange from a tax deferred annuity to any type of life insurance policy. If you want to buy a life insurance policy with the proceeds from an existing annuity, you will first have to annuitize (or surrender) your annuity and pay taxes on any deferred gains.

https://www.ohioinsureplan.com/understanding-the-1035-tax-free-annuity-and-life-insurance-exchange/

M

mwearmouth

I have code 7D in box 7

P

pbthepest

I am using Turbo Delux. I entered a 1035 transfer using the information on the 1099-R for Federal Taxes. Review showed no errors. The Massachusetts State Tax ,Form 1 under pensions and annuities smart worksheet "Check this entry". "Form 1: Tax-Exempt Pension should not be entered directly on Form 1 for state electronic filing."

C

Cynthiad66

@pbthepest

Once you have determined that your pension is indeed exempt on your MA return, you can follow these steps to make sure it is entered correctly in TurboTax:

Select the “Federal Taxes” tab
Select the “Income” tab
Select “5. IRA and Pension Distributions” Add or Edit button
Enter the pension information (payer’s name, gross distribution, etc.)
Continue through the interview until you get to the screen titled “Select Your State” and select Massachusetts
Continue to the next screen and indicate whether the pension is:
1. Federal government pension that I contributed to
2. Military and survivors’ pension
3. MA state or local govt pension that I contributed to
4. Certain state court judges’ pension
Select the “State Taxes” tab and complete the Massachusetts interview
If one of the 4 options were selected in step 6 above, the pension is excluded from Form 1, line 4 and an explanation statement is attached to your Massachusetts return with the reason for excluding the pension