In Early March 2020 we did our normal RMD. In late March 2020 the Cares act became law. The act stated that there would be a 2020 RMD Holiday. What to do as we just took our 2020 RMD... Called our custodian and they said because of the act you can rollback your RMD, but you had to replenish the withheld taxes so as to restore the full amount. We did the the rollback... X dollars out X dollars back in.. a wash. Roll forward to 2021 and we received a 1099R showing that we took an RMD of X dollars along with that a form 5498 showing a rollover transaction for X dollars. On the 1099R box 2a shows X dollars taxable. Those X dollars show up on line 4b on the 1040 as a distribution even though I answered the follow on questions regarding rollover when entering the 1099R data. The only way I can make the 4b entry disappear is to override box 2a on the 1099 as a taxable amount zero. I'm thinkin' this might cause an issue with the IRS. This transaction seems like an indirect rollover where you take possession of IRA funds and put it back within 60 days. Is TT wrong by passing through the amount to line 1040 line 4b or did my custodian not handle the transaction correctly and my 1099R should have been coded differently i.e Box 7 . Or am I in an alternate universe were my "do over" is a taxable event?.
