@RaifH
@edwkramer
Here, the taxpayer cannot rollover the entire amount because part of the amount that will be reported on the 1099R is required to satisfy the RMD.
There is a series of questions, and I can’t remember the exact order but I posted this about it with screenshots for another customer. Essentially, when you enter the 1099R, one of the things you will be asked for is “is this an RMD?” You will answer that part of it is an RMD, and the program will ask you to enter that part. Then there is another screen where you are asked “what did you do with the money?“ You must first select that you did a rollover or contributed it to another retirement account. That will pop up a new question for how much did you roll over, in which case you will indicate the amount of the rollover. You can’t rollover the part of the withdrawal that was an RMD.
For example, let’s suppose that your RMD amount for 2021 was $5000. It sounds like the plan custodian sent you $10,000, with different amounts withheld. The 1099R will only indicate the total amount withheld, so let’s assume that that was $3000, and you have a net of $7000 in your pocket. You can roll over any amount up to $5000, because you can’t dip into the amount that satisfies the RMD. If you were thinking that, since half the amount is the RMD I can roll over the other half, and you roll over $3500 as half of $7000, that would be treated as a rollover of $3500 only.
whatever amount you don’t roll over is taxed as ordinary income and you will get credit for all of the withholding on the 1099R.
