1099-R Shows Total Distribution, but doesn't show RMD amount

[Rick152]

We changed investment institutions in August 2021.  We encountered difficulty with Inst #1 transferring (rollover IRA funds) to Inst #2 and had to take the total funds by check to close the account.  Funds were deposited with Inst #2 within 2 days to complete the rollover.   I have to take an RMD from this IRA.   Institution #1 distributed the RMD and withheld appropriate taxes for it prior to the funds being distributed.  The balance of the IRA was distributed to me via check, which was deposited with Inst #2 to complete the rollover.  At year-end, Inst#1 issued a 1099-R showing the total IRA amount (IRA balance + RMD amount) as a gross, taxable distribution.   It shows the taxes withheld for the RMD amount, and distribution code 7, IRA/SEP/Simple box checked.  Should Inst #1 have issued separate 1099-R's for the IRA balance and the RMD?  I asked them the same question and they declined to make those changes, telling me that "it's all the same money".  I realize that Inst #1 could not document the rollover because they did not do the transfer to Inst #2.    How do I properly report this to the IRS on my tax return?  Will TurboTax address this situation in the course of filling out my return?

Thanks, Rick

[DawnC · Accepted solution]

Yes, TurboTax will handle that.   You should have only received the one 1099-R and the code is correct considering the money went to you.   After you enter the 1099-R (that link has instructions), you will be asked if the distribution represents your RMD to which you will answer YES, some or all of this was an RMD.    Enter the gross amount of the RMD check you received when asked.   This will satisfy your taxable RMD requirement.   

On the next screen, you will asked what you did with the remaining money.   You will indicate that you moved the money to another retirement account - and that you did a combination of rolling over, converting, or cashing out the money.    Enter the amount of the check you deposited to inst#2.   This will be less than the amount on Form 1099-R (it doesn't include your RMD).   The summary screen and Line 4a of Form 1040 will show the gross distribution, but if you look at Line 4b, that will reflect only the taxable amount.    The tax withheld from your RMD will be credited when you enter that amount from box 4 of your 1099-R.   

[Rick152]

Thank You, Dawn, for providing a very clearly stated answer that fully addressed my concerns.  I appreciate your time and willingness to share your knowledge.

Rick