Section 1411

[arlo]

Have a 1099 R with a 4D code. TB Says 4-Death D- Annuity payment from nonqualified annuities that may be subject to tax under section 1411.
The 1099R shows about $29000 Dist. with $ 11000 taxable. I don't think there is any death involved. I want to look at section 1411. Can someone tell me where to look for this. tks

[Burke]

You can Google it and it comes right up. Section 1411 refers to Net Investment Income Taxes, which your client may or may not be subject to depending on his AGI and type of income he receives. A non-qualified annuity usually includes basis (amount of after-tax money invested), so that is why gross is more than net taxable. The net taxable amount represents earnings. You cannot rollover a non-qualified annuity payout, other than a direct transfer -- 1035 exchange -- into another annuity. The 1099R appears to represent a distribution of an annuity based on a beneficiary payout from a deceased individual. The taxable amount should be reported on the recipient's tax return. If it was due to a death payout, the 10% penalty which might otherwise apply in your client's case would meet one of the exceptions, according to the code reported.