2020 RMD from a Non-Spousal Inherited IRA

[vhoudini]

In July 2020, I rolled back the RMD I took in Feb 2020 from a non-spousal inherited IRA, as allowed by the IRS in this announcement - 

https://www.irs.gov/newsroom/irs-announces-rollover-relief-for-required-minimum-distributions-from-r...

Unfortunately, after 2+ hours on the phone with Live Help today, I was told:

1.  To complete Form 8915-E in the desktop software, which does not seem correct since on page 3 of the IRS Instructions for this form, it specifically excludes RMDs, and then

2.  That I wasn't eligible to have rolled back the RMD since it was from a non-spousal inherited IRA, which is also incorrect based upon the announcement from the IRS (see link above) on June 23, 2020.

From googling this and looking at the Form 1040 Instructions, it seems pretty simple - 

[removed]

https://www.irs.gov/instructions/i1040gi#idm[phone number removed]808

Yet no matter how I answer the questions about this RMD on both TurboTax Desktop and Online, the amount  still shows up in my taxable income on my 1040, line 4b.   

Can anyone help, please???

[AmyC]

Yes. The RMD was abolished after you took the money. The inherited IRA was exempted from RMD when the law changed. In the program, when it asks about RMD, you must enter none of it was RMD. You took the money out and put it back. Straight and simple. No 8915, no 3 years. 

You have a 1099R with the distribution, when you go through the program, mark that you rolled it over. You rolled it back into the same plan. 

Don't let the program logistics throw you off. The goal is for the tax return to be correct. Nothing showing in the taxable income section. 

[vhoudini]

Thanks, Amy.  Sadly, what you suggest does not work - the RMD amount is still showing up as taxable income on line 4b of my 1040.  It appears to be a bug with the software for inherited non-spousal rolled back RMDs that TT seems to be unwilling/unable to fix. I have a case number for the issue but the people reviewing the case gave me a solution that seems to address exception 2 in the 1040 instructions (p. 25), not exception 1, which is my issue.  Because the TT email address that the “solution” was sent from does not receive any incoming messages, I can’t reply with that feedback.  Any suggestions you have as to how to get this correction fixed in the software would be most helpful, although it’s now a bit less urgent with the tax deadline extended to May 17.  

[ColeenD3]

You need to indicate the rollover if that is what you did. In the interview section, you will encounter a screen that asks you what you did with the money. Show it there.

[Gatman999]

I can't believe this still isn't fixed to work correctly for 2020.  I just wasted two hours on the forum and in TT, deleting and re-entering my 1099-R multiple times.  No matter what I do, I cannot get the amount I put back into the IRA to not be taxes by TT.

I have an IRA I inherited in 2011 from my mother, and I take the RMD every year in January.  This year as a result of the cares act, the RMD was waived and we are allowed to return the funds to the IRA by August 31st, which I did.  I'm using the desktop version of TT and have the most recent updates installed, and this is still not being handled correctly.  I tried a number of work-arounds listed in the forum, but ultimately the only way I got this to NOT be taxed was to indicate it was NOT inherited and then I could get the option to do the rollover. 

And even more frustrating is all of the TT "Experts" posting over and over that you can't roll over and RMD from an inherited IRA because they aren't reading and understanding people's actual questions/situations.  I wonder how many folks are going to end up paying taxes on this that they don't owe.

Incredibly disappointing.

[vhoudini]

Spoiler

While I’m sorry to hear that you have had the same experience, Gatman999, I’m somewhat relieved to know that SOMEONE understands the problem since the “experts” at TT don’t. 

I’ve escalated the issue TWICE now through supervisors at TurboTax and both times the response was to utilize Form 8606 which is the solution for exception 2 in the Form 1040 line 4 instructions, not exception 1, which is the actual problem (and solution). 

I am so frustrated with TT over this.  I requested (and received)  a refund for both the online and desktop versions of the software and am likely going to have to pay an accountant do my taxes this year because of this issue.  I can understand TT having a lot of changes to make to their software this year to accommodate all the covid legislation passed in 2020, but they don’t even understand what needs to be fixed, so how can they possibly fix it?  

I filed an extension but am (foolishly?) hoping that TT figures out what needs to be fixed in the next few months.  I am not holding my breath, though.