@hjhood wrote:
My age 78. April 2020 I (without any knowledge) unintentionally took $27,000 out of my traditional IRA and transferred it inside Regions to a CD; effectively canceling the IRA. In the previous ten years or so I have used this IRA account to withdraw all IRA RMDs.
I am doing my TurboTax and discovered there is now a penalty of 50%. I have talked with the bank and because of their 60 day 'fix it rules' they cannot fix/advise/help. They suggested talking to a Tax Advisor.
Perhaps in part, a partial resolution is to go ahead and take the $11,000 I would have normally taken out of the $27k - and suffer the $6,000 balance in a 50% penalty. Can this penalty be carried forward and usefully utilized in some way; ie, as a down payment on next year's taxes?
Is there an IRS document that gets me out of this dilemma?
You simply misunderstood the question in TurboTax. There is no penalty. Delete the 1099-R and re-enter.
The question is was all the 2020 RMD received. Since it no only met that requirement you far exceeded it. so answer the RMD questions that it was all a RMD and you received the 2020 RMD.
In addition, since the CARES Act waived the 2020 RMD requirement for IRA's, you did not need to take the RMD at all so the questions can also be answered that "none of this distribution was a RMD" and "RMD not required" because it actually was not a RMD at all in 2020.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
