Distribution Code 7D
Hello, I have a client that has a non-qualified annuity that she just received a 1099 from. She has taken monthly distributions and should not have any gains. What is Distribution code 7D?
Hello, I have a client that has a non-qualified annuity that she just received a 1099 from. She has taken monthly distributions and should not have any gains. What is Distribution code 7D?
Permalink Submitted by Alan - IRA critic on Mon, 2014-02-03 17:09
D is a new distribution code for 2013. 7 means after age 59.5 as before and D is the new non qualified annuity distribution code. The taxable amount of the distribution should still be indicated in Box 2a based on the differing rules depending on when the annuity was purchased.
Permalink Submitted by David Sloper on Mon, 2014-02-03 19:58
Can someone pay for their grandchilds college education directly via a IRA distribution? If so, what are the tax implications if money is sent directly to the institution, or are there any adavntages to doing so?
Permalink Submitted by Alan - IRA critic on Mon, 2014-02-03 20:45
While most custodians would probably not send the funds directly, some may but either way the IRA owner is going to receive the 1099R, and it will be coded 1 (early) unless IRA owner has reached 59.5. The IRA owner must then file Form 5329 to claim the higher education exception code “08”. There are no tax advantages for by passing the IRA owner other than the institution may get the funds a little earlier. Another option more likely to be acceptable to the IRA custodian is to make the check out to the institution but mail it to the IRA owner for delivery, as is done for qualified chartible distributions.