Death Benefit Annunity. Is it taxable?

Yes, the death benefit annuity you receive from the Office of Personnel Management (OPM) is generally taxable. The tax treatment depends on whether the annuity is considered a qualified or nonqualified annuity:

• Qualified Annuities: These are funded with pre-tax dollars and are tied to retirement plans like IRAs or 401(k)s. Distributions from qualified annuities are taxed as ordinary income
• Nonqualified Annuities: These are purchased with after-tax dollars. Only the earnings portion of the distribution is taxable, while the principal is excluded
• Forms from OPM: You should receive a Form 1099-R from OPM, which reports the taxable amount of your annuity
• Adding Form 1099-R in TurboTax: Use the search bar to type "1099-R" and select the "Jump to" link.

For more detailed information, you can refer to the OPM's Deceased Annuitant Benefits page and IRS guidelines on annuity taxation