My wife had an RMD in 2024, and in past years she had made some non-deductible IRA contributions, so there was some IRA cost basis reported in past years on Form 8606. What I'm seeing in TT H&B 2024 is that it's asking for:
"Enter the total value of all of <spouse's> traditional IRA, SEP, and SIMPLE IRA accounts on December 31, 2024. This information is sent by mail on Form 5498..."
This seems like a bug. Shouldn't TT be asking for the total value of her IRA on December 31, 2023, which is what the RMD calculation was based on, and the amount reported on Form 5498? Otherwise, I don't see how TT can determine the taxable portion of the RMD taken in 2024.
UPDATE: After checking with the instructions for IRS Form 8606, it says:
"Line 6
Enter the total value of all your traditional, traditional SEP, and traditional SIMPLE IRAs as of December 31, 2024, plus any outstanding rollovers. A statement should be sent to you by January 31, 2025, showing the value of each IRA on December 31, 2024. However, if you recharacterized any amounts originally contributed, enter on line 6 the total value, taking into account all recharacterizations of those amounts, including recharacterizations made after December 31, 2024."
Note that it doesn't mention Form 5498, which generally are not available until the middle of the year (for the previous year's IRA balances). It says to find the value of each IRA on your end of year account statements. So, it appears that TT is NOT asking for the wrong year's IRA balances, since it is consistent with the IRS Form 8606. HOWEVER, the TT instructions appear to be wrong, as they should not be saying to look at Form 5498 for this information, but instead refer you to your most recent end-of-year IRA statements.
All this make it seem that the IRS rules have a bug, or at least flawed logic. Looking at the calculation being performed on Form 8606 to determine the non-taxable portion of the RMD, it is adding the sum of all IRA balances from the previous year (12/31/2024 in this case) PLUS the RMD amount taken in 2024, and dividing the cost basis of the IRAs by this sum. I don't see how this calculation makes any sense. Why use the end of last year's IRA balances (instead of the previous year's end-of-year balance, from which the RMD amount was determined) plus the amount of your RMD as the divisor of the RMD cost basis? Can someone who understands the tax treatment of RMDs when there was some non-deductible IRA contributions please explain the IRS' logic here?
