This is what I determined based on further review:
- This was our deceased relative's 401k rolled over into an inherited IRA (apologies for the confusion).
- There were 2 1099Rs received for 2024 -
A) the 1st lists the amount rolled over (non-taxable) and
B) the 2nd lists the RMD distribution (taxable). - When I enter the 2 1099Rs into TT there is a field for each of the 1099Rs that asks for the amount of the "RMD due by Dec 2024".
- A) When I enter the RMD required amount in field for "RMD due by Dec 2024" as part of the 1099R reflecting the amount that was rolled over, the system shows a large amount of tax due that seems to include a penalty of $3500+.
B) When I enter the RMD required amount in field for "RMD due by Dec 2024" as part of the 1099R reflecting the RMD amount distribution, the system has a much lower tax due that does not include the penalty.
Since the required RMD was taken and a penalty does not seem appropriate at all, I would assume I should go with 4b for my entries. Let me know if any of you disagree.
