TH Twig, LLC 2025 Notes
- TH Twig, LLC for 2025 had no taxable transactions
- All account transactions were contributions and distributions from members
- cat9fin “C:\cat9finshare\Account\BHaymondTrust\THTwig”
BHaymond Trust
- cat9fin “C:\cat9finshare\Account\BHaymondTrust\2025-BHaymond\2025 Haymond B Form 1040 Individual Tax Return.tax2025”
- Missing Form 5496 “IRA Contribution Information” Elco Mutual Life have Carla’s don’t have Brians
- You guys could contribute up to 16K IRA and save $1920 on taxes
- The “Missing” form was because Elco accounts are not IRA
- Will need to file 2024 1040-X
- Removed ALL IRA Contribs
- 1099-R Had to ADD the 2 $500 distributions from ELCO (as fed wants interest to be taxed)
- 1099-R Confirmed Walmart 1099-R was rollover
- 1099-E Added the Student Loan Int (saved $300)
- K-1 Added Moms (saved $600)
- K-1 Klop Farms - ok ( $0 income)
- K-1 Trees AES - ok ( -1731 loss, saved $180)
- 1099-INT EJ - ok
- 1099-DIV EJ - ok
- Checked W-2 again (Brians OK, issue with Carla’s) Both OK now
- TurboTax check found an issue, after review, the K-1 for mom’s sb added to Trusts K-1, so I deleted and moved
- Printed Forms (and copy)
- Wrote checks (out of TH Twig where it was the last deposit)
- Sitting on Kitchen table ready to sign
reference
Based on the 7D code and your description, the short answer is no, you cannot treat those deposits as IRA contributions.
The account you opened with ELCO Mutual is a non-qualified annuity, not a qualified IRA. This distinction is critical for your taxes: [1, 2]
Why it isn’t an IRA contribution
- Non-Qualified Status: Code D in Box 7 explicitly tells the IRS this is a “non-qualified” plan.
- Unlike a Traditional IRA, contributions to a non-qualified annuity are not tax-deductible.
- The “personal cash” you deposited was already taxed, and the IRS does not allow a second tax break (deduction) for putting it into this specific type of account.
- IRA Limits & Teachers: As teachers with a retirement plan (IRPS), your ability to deduct Traditional IRA contributions is already limited by your income. Even if this were an IRA, you might not have been able to deduct the full $6,000 each if your combined income is above certain thresholds. [2, 3, 4, 5, 6, 7, 8, 9, 10, 11]
What the 1099-R represents
- The Distribution: When you reduced your deposit by $500, the insurance company likely processed this as a “withdrawal” or “partial surrender” of funds to return them to you.
- Earnings First (LIFO): In a non-qualified annuity, the IRS uses “Last In, First Out” (LIFO) rules. This means any earnings (interest) come out of the account first and are 100% taxable.
- Your 1099-R Amount: If Box 2a has a value, that is the interest your money earned while it was in the account. You must pay tax on that interest now, even though the original money you put in was already taxed. [5, 6, 7, 8, 12, 13, 14]
Summary Table: Non-Qualified Annuity vs. IRA
| Feature [1, 2, 5, 8, 15, 16] |
Non-Qualified Annuity (Your ELCO Account) |
Qualified IRA |
| Tax Deduction on Deposits |
No |
Yes (subject to income limits) |
| Growth |
Tax-Deferred |
Tax-Deferred |
| Withdrawal Rule |
Earnings taxed first (LIFO) |
Proportionate (Pro-rata) |
| 1099-R Code 7D |
Yes (Normal/Non-qualified) |
No (Typically Code 7 or 1) |
How to proceed in TurboTax
- Enter the 1099-R exactly as you did before (using Codes 7 and D).
- Do not list these specific ELCO deposits in the “IRA Contributions” section of TurboTax.
- If you still want to make a real IRA contribution for the year to get a deduction, you would need to open a separate account specifically labeled as a Traditional IRA at a bank or brokerage and deposit funds there before the tax deadline. [2, 17, 18]
Do you have another separate account specifically labeled as an IRA where you made contributions this year?
[1] https://smartasset.com
[2] https://ttlc.intuit.com
[3] https://www.irs.gov
[4] https://support.taxslayer.com
[5] https://www.elcomutual.com
[6] https://www.investopedia.com
[7] https://www.bankrate.com
[8] https://www.diversifiedquotes.com
[9] https://ttlc.intuit.com
[10] https://www.nesgroup.us
[11] https://www.irs.gov
[12] https://www.irs.gov
[13] https://www.irs.gov
[14] https://www.thrivent.com
[15] https://www.irs.gov
[16] https://www.bankrate.com
[17] https://ttlc.intuit.com
[18] https://www.schwab.com