2024 RMD Excess Accumulation Worksheet Problem - TTax Deluxe

[DanCl1745]

I have 4 traditional IRA accounts in my IRA, the first and second accounts withdrew nearly double their stated RMD amounts, the third account withdrew its total RMD and the fourth account withdrew only about half of its RMD.  No problems were seen when I entered the numbers for the first three accounts in their worksheets, which collectively covered my entire RMD requirements for all four accounts by almost double.  However, when I entered the total RMD amount and the withdrawal amount in the fourth account I was shown nowhere to declare that the underpayment of RMD for that account was already covered by the other accounts to satisfy my total aggregate RMD for my IRA.  What I did see was creation of a Schedule 2 and a Form 5329-T for "Additional Tax on Retirement Distributions". 

Can I expect to see this problem resolved in January when the IRA and Pension Distributions module is released for filing?

[rjs]

The 1099-R section of TurboTax for 2024 is not available yet. It is currently expected to be available January 11. (That date could change.) You must have entered your IRA withdrawals in forms mode, which does not tell you that it's not ready yet.

When the 1099-R section is available, enter your 1099-R forms in the Step-by-Step interview. After you have entered all of your 1099-Rs, continue through the questions. You will come to a screen that asks you if you took your full RMD. All you have to do is answer that you did receive your full RMD.

[DanCl1745]

Thank you for your prompt reply.

Yes, I did use the forms to enter my data since I was trying to get an early look at my tax situation instead of waiting all the way to mid-January.  Since the subject worksheet had been modified to reflect new fields/qustions relative to previous years, I just wanted to ensure I would still have the opportunity to confirm that  all of my RMD had been accounted for.

[dmertz]

This has nothing to do with the retirement section not yet being available in step-by-step mode.  The entries in forms mode that create the reporting of an excess-accumulation penalty are done directly in Part IX of Form 5329, so to get such a penalty being reported means that you made an incorrect entry there.   Examine Form 5329.

The RMD entries on TurboTax's 1099-R forms serve only to indicate the amount that is ineligible for rollover.  TurboTax has no way to determine the amount that you are required to have distributed.  Your tax return only shows an insufficient amount distributed if you self-report the shortfall on Form 5329 Part IX.

[dmertz]

Also, there have been no changes to these forms for several years.  2024 TurboTax is the same as 2023 TurboTax with respect to TurboTax's 1099-R form and 5329 form.  With respect to RMDs, the entries in 2024 TurboTax will produce the same result as in 2023 TurboTax.

[domerdoc]

I have the same question and problem.  In the past, there was just the question asking if you met the RMD.  The entry forms for 1099s are now out today.  Using Step-by-Step for my first entry brings up a page that appears to require you to make an $entry for the RMD (for that account).  My distribution for that account is far more than required.  I have several IRAs with large RMD but with $0 withdrawals since the RMD is covered by other accounts.  There should not be a 1099R issued if no money was withdrawn, so there is no entry in TurboTax for these accounts.  Additionally, I have distributions from fixed annuities.  There is no true RMD as it's defined by the annuity.  How do you make the entry on the page for the required RMD?  Same as the known distribution?

[dmertz]

I have a correction to my earlier reply.  Form 5329 Part IX has changed for 2024, so the recently released version of TurboTax now has changes to the way that TurboTax handles the determination of a requirement to file Form 5329 Part IX.  The developers made a mess of it for cases where the individual has more than one account that requires RMDs to be taken.  If all RMDs were completed timely, it's possible to get the correct result by manipulating the numbers (entering as the required RMD no more than the gross amount of the particular distribution) such that TurboTax does not prepare Form 5329 Part IX.  However, for someone with multiple independent RMD requirements for different accounts and only some RMDs were missed, TurboTax prepares an incorrect Form 5329 Part IX because TurboTax fails to include information about RMD amounts that were satisfied in full.  This causes the Form 5329 to be incomplete although the correct penalty is calculated.

[domerdoc]

Still not certain why the change in the form now requiring entry of $ amount.  Prior years you only had to click the radio button saying you took all the RMD required, and that meant the total, not referring to the individual accounts.  You're right - this makes a mess of things.  Still no way to figure what the RMD is for fixed annuities.  The annuity does list a "fair market value" at end of each year, but I was told this is NOT a true account value, only a representative value if you had to purchase the annuity for that amount at that time.

[dmertz]

They are trying to lead the user in determining whether the missed RMD is subject to a 25% excise tax (not corrected during the correction period) or instead to a 10% excise tax (the RMD taken late, during the correction period), changes brought about by the SECURE 2.0 Act becoming law.  However, the penalty is assessed on the aggregate amount subject to the 25% excise tax and the aggregate amount subject to the 10% excise tax, so trying to make the determination on a 1099-R-by-1099-R basis doesn't really work for IRAs and, separately, for 403(b)s, where RMDs can be aggregated and the total RMD taken from only one of each of these types of retirement accounts.  To accommodate the cases where the RMD for one of these accounts is taken from another, the present implementation in TurboTax requires allocating the total RMD amount for one of these types to the different Forms 1099-R such that no entry of the required amount exceeds the gross-distribution amount (unless there actually has been a missed RMD, in which case it would make sense to allocate the missed amount to just one of the Forms 1099-R for that type of account (IRA or 403(b) of the individual).

[DanCl1745]

Either there was some change on 09Jan25 to the algorithm for entering the 1099-R traditional IRA account data or I was likely answering their questions incorrectly.  When I now do the following for my IRA account that did not withdraw its full RMD amount, I no longer trigger Form 5329:

Was this withdrawal an RMD for 2024?

• Yes, some or all this withdrawal was an RMD

Tell us how much of the (rec'd amount) (You) received applies to the RMD that needed to be taken out

• All of this distribution was an RMD

What was the required minimum distribution for (Your) account in 2024?

• Required Required Minimum Distribution Amount  > $$$$

Did (You) take out the remaining (shortage amount) during the correction window?

• No, (You) did not

This seems to have satisfied the algorithm to not trigger Form 5329.  I can only guess that when I answered "No" it then reviewd my other 3 IRA accounts and confirmed that their withdrawal totals more than covered my total RMD for my 2024 Individual Retirement Arrangement.  I really wish they would have created something in the 1099-R Worksheet that illustrated just how that was being done.  Maybe next year.....