Retired with a 401k that gets an annual RMD. TurboTax asks if I get regular periodic payments from this retirement account.

Forum|Forum|6 years ago
July 10, 2020
1 reply
36 views

I searched TurboTax forum and found TWO posts that seems to match my question, with two CONTRADICTING answers from Level 15 users (possibly TurboTax employees?), so I would like to lay it all out here and find out this answer.

I'm 72 and retired with a 401k. I'm of the age where I'm getting an RMD every year. I have to call Fidelity to remind them to do it every year. It happens EVERY year, but NOT necessarily on the same exact DATE every year. Fidelity calculates the amount the RMD should be THEMSELVES to be in line with whatever the IRS wants, I don't choose it, and I DON'T think it's the EXACT same dollar amount either every year.

TurboTax asks me "ANY PERIODIC PAYMENTS? Did you receive payments from this retirement account on a regular basis, such as monthly, quarterly or annually?"

There are 2 choices:

"Yes, I got regular periodic payments from this retirement account"

"No, I didn't get regular periodic payments from this retirement account"

What do I do? It is not clear to anyone whether TurboTax is thinking of a SEPP, if I am personally doing a SEPP, or what TurboTax is thinking when they ask this question.

Here is what the help file says to clarify the question:

"Periodic Payments

Funds that you receive at regular intervals (weekly, monthly, quarterly, annually) over a predetermined period of time, for example, 15 years, or for life.

Equal periodic payments are annual withdrawals that you make from a pension plan or 401(k) plan. The amount you withdraw is calculated so that the funds last throughout your expected lifetime."

Thank you for looking into this.

401K

Best answer by dmertz

Guess I was wrong. Learn something every day. I defer to the other answer.

macuser_22 is correct. "Periodic payments" refers to distributions being received in the form of an annuity (a traditional pension, for example), where your distribution amounts and dates are all predetermined. What you are receiving are nonperiodic distributions, even though some amounts are required to be distributed each year. If you have the freedom to take out more than the RMD, it's nonperiodic, even if by choice you take the same amount out each time on a regular schedule. The Simplified Method and General Rule are applicable only to periodic payments being received in the form of an annuity.

VolvoGirl

Level 15

Answer yes you get regular payments. You get it once a year. That is Annually.

macuser_22

Alumni - Champ

I have to disagree with VolvoGirl. The periodic payments is for a pension that the periodic payment is based on years of service as in a defined benefit plan, not a 401(k) where the distributions are voluntary, one time distributions ever if automatic based on RMD amounts.

That is not what is meant as "periodic payments" based on a retirement payment formula from a retirement pension unless it is a 401(k) that can pay an automatic amount for the rest of your live time (essentially a 401(k) that acts like a lifetime retirement annuity.)

Answer NO.

**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.**