The Stimulus bill passed in late March of 2020 included tax relief for retirees. Required Minimum Distributions (RMDs) were suspended for the year 2020. If you had taken money out of your IRA account earlier in the year, you were allowed to return the money back to the original plan you took the cash from to avoid paying any taxes on it. You had to return the money by 8/31/20.
That is my situation. I took $10,000 out in January of 2020 and then put the $10,000 back into the same account in early August of 2020. Fidelity handled the transaction to ensure the put back of the cash was coded correctly. They said the return of funds would be shown as a “IRA contribution” on Form 5498 and would be a deduction to taxable income since the original withdrawal of the $10,000 would show up as taxable income on Form 1099-R. And that agrees to the tax forms I recently received from Fidelity. The $10,000 is part of the taxable income shown on 1099-R and Form 5498 shows rollover contributions of $10,000 on line 1 of that form.
Here is my problem with entering this into TurboTax. First some information on me. I’m 74 and have income from pensions and social security. And, in a normal year, take my RMD as required. I do not have any “earned income”. Also, the $10,000 was taken out of and put back into an IRA Rollover account, not a Traditional IRA account.
So, in TurboTax, I go to “Retirement and Investments” and then into “Traditional and Roth IRA Contributions”. The first page has you indicate if this is a contribution to a “Traditional IRA”, a “ROTH IRA” or “None of the Above”. Since, in my case, this is a contribution to an IRA Rollover account, I check “None of the Above”. No luck. Doing that immediately backs you out of the input screens.
Since that didn’t work, I thought I would try to fool the system and indicate the $10,000 was a contribution to a Traditional IRA. Many screens later, TurboTax finally tells me that my IRA contribution is not permitted because I do not have any earned income. In fact, TurboTax tells me I have made an “Excess Contribution” and will owe a 6% penalty of $600 on it.
So how and where do I enter this $10,000 contribution to an IRA rollover account in TurboTax?
Thanks for your help.
Tom
