I do not understand the "tax on excess accumulations in retirement account." Is this additional tax I owe? And if so, why?

Forum|Forum|1 year ago
January 22, 2025
3 replies
8 views

Is this a tax over and above the tax I've already paid on my IRA RMD?

MaryK4

Level 15

The tax on excess accumulations in retirement accounts is an additional tax you would owe if you made an excess contribution in a prior year. Because IRAs have tax advantages, the limits must be adhered to- for example, if I ignored the contributions limits and put $100,000 in a ROTH IRA, I would be able to have more tax-free income on the earnings when distributed. It is 6% per year that the excess is kept in the account to encourage correction.

It is be in addition to any tax you paid on your IRA distribution and/or tax for late payment of RMD.

Please see Tax on Excess Contributions.

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VolvoGirl

Level 15

It also could be if Turbo Tax thinks you didn't take your full RMD amount. Did you have more than 1 1099R? Go back though the 1099R and followup questions. It will ask how much is your RMD. It usually should be the same amount as that 1099R box 1. It asks for each 1099R separately so don't enter the total RMD for all.

lcgundo

Level 3

I have the same problem and none of these explanations make any sense. I've been retired for 29 years and haven't made any contributions to any retirement accounts in decades. There also seems to be a conflation between excess "contributions" and excess "accumulations.

In my case the little table shows nothing but zeroes except for an amt listed as "Deductible" amt alongside "Tax on excess accumulations in retirement account". And this is the first time I have seen such a message on Turbo tax any time.

VolvoGirl

Level 15

Tax on Excess Accumulations means you didn't take out enough to cover your RMD from the account. Is this the first year you have to take a RMD? Did you turn 73 in 2025? Afrter you enter a 1099R it will ask how much was the RMD. If you get a pension you need to enter the gross amount as the RMD and say all of it is the RMD.

Or there might be a problem in the program how you report your RMD.

lcgundo

Level 3

I am 86 years old and have taken RMDs for 16 years. I just now reviewed all of my entries and I withdrew a total amount that exceeded the requirement by $66. And I calculated it separately for my 401K and my IRAs. I made those withdrawals in June & October of 2025 and I indicated that the entire amounts where to satisfy the RMDs.

Part of what is confusing is that the table Turbo displays is filled with zeroes except for the part labeled "Tax on excess accumulations". And there is no explanation of why there is a tax being assessed or how the amt was calculated.

I don't know what else to do except wait and see if Intuit updates Turbo and that fixes the problem.