CARES Act - returning RMD

Your tax attorney is entirely incorrect about what would be reported on the Form 1099-R.  Forms 1099-R report only what was distributed from the account and reflect nothing about what was put back.  The fact that some or all of the distribution was put back will be reflected on your tax return, not on the Form 1099-R.  As you found, the Form 1099-R is required to have the entire gross amount in boxes 1 and 2a, box 2b Taxable amount not determined marked, the federal tax withholding in box 4, code 7 in box 7, the IRA/SEP/SIMPLE box marked and any state tax withholding in box 14.

The Form 5498 will show a rollover contribution, not a regular contribution, of the amount that you repaid to the IRA.

Since RMDs were waived for 2020, no part of the distribution was actually an RMD even though it was taken with the intention of satisfying an RMD.  In TurboTax, indicate that the distribution was not an RMD.  Indicate that you moved the money to another retirement account (or returned it to the same account), then indicate how much of the distribution you returned to the IRA.  TurboTax will include the entire gross amount on Form 1040 line 4a but exclude the amount rolled over from the amount on line 4b.  TurboTax will also include the word ROLLOVER next to the line.

If you did not substitute other funds for the amount withheld for taxes so as to complete the rollover of the entire gross amount of the distribution, the amount of the withholding remains distributed, not rolled over, and subject to tax; it's too late to complete a rollover of that portion of the distribution.  If the overall tax liability determined on your tax return is less than your total withholding, including the amount withheld from the IRA distribution, you'll get a tax refund.

Thank you so much for this information dmertz. I am in the same situation. So helpful! 

I took an RMD in January of 2020 and after passage of the Cares Act, I returned the RMD.   I received a 1099-R showing the entire amount along with the taxes that were paid (ie: I took $4,000 of which $3,320 was the RMD and an additional $680 to cover the taxes).  Form 5498 shows it as a Rollover Contribution.  

As I go through the step by step instructions in Turbo Tax, it reads:  Your IRA Contribution Isn't Permitted and is considered an excess contribution.   The reply below indicates you can indicate that the distribution was not an RMD.   

However, where in TurboTax following the step by step instructions can you indicate that the distribution was not an RMD? 

Please do not enter the returned amount as a contribution under the Deduction and Credit section. Please delete these entries:

1. Login to your TurboTax Account 
2. Click "Federal" from the left side of your screen
3. Click on “Deduction and Credits” tab on top
4. Click "edit" next to "Traditional and Roth IRA Contributions"
5. Remove the checkmark next to "Traditional IRA"
6. Select "yes" to "Remove Traditional IRA Contributions?"

Please follow these steps to enter your 1099-R and the return of RMD:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Continue until "How much was a RMD?" and select "none"
5. Continue "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"
6. Continue answering the questions.

 RMDs were waived for 2020 and you must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD then you must delete and reenter the 1099-R form. Only editing the 1099-R form and changing your answer to the RMD question will not work.

This is the most clear explanation I have heard on the subject. Even after trying to rationalize how to handle with 4 TurboTax rep's.  

Following the suggested steps I was finally able to get the correct result. 

Thanks so much for your detailed and excellent message.

These steps seem to be for the online version of Turbo tax 2020. I am using the download version ( Turbo Tax Premier) installed on my computer . I could not find the question " How much was a RMD?" nor any of the following steps mentioned in he instructions posted.

Could you post the steps for the download version of TurboTax Premier, Please?

Thanks for the solution as it was not intuitive as to what to do.  I have the same situation.

Please follow these steps to enter your 1099-R and RMD rollover in TurboTax Desktop:

1. Open you return in TurboTax 
2. Click on the Search magnifying glass on the right top and type “1099-R” in the box
3. Click on “Jump to 1099-R”
4. Continue until "About this Retirement Account. / Was this withdrawal an RMD for 2020?" and select "No, none"
5. Continue "What did you do with this money from this payer?" and select "I moved the money to another retirement account (or returned it to the same account" the select what applies to you.
6. Continue answering the questions.

RMDs were waived for 2020 and you must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and renter the 1099-R form. 

You can verify your entry by switching to Form mode (click on Forms at the top right). Look at your Form 1040 line 4 or 5.

@azaheer1

Okay, I have followed the instructions regarding the above subject, and have the federal return correct.  However, when e-filing the NY State return, I am getting an error because the amount of state tax withheld (which I am trying to recover), exceeds the amount in the state distribution box or gross distribution.  I entered the information exactly as stated on the 1099-R, which had 612.00 state income tax withheld, and no amount in the state distribution box.  How do I fix this to be able to continue to file electronically?

Box 14 is not usually required because it has been an 1099-R industrial standard for many years that if there is only one state in box 12 & 13 then the box 1 amount does not need to be allocated between two states - the entire box 1 amount is understood to be the state distribution so box 14 is just left blank.

But recently, there are at least two states (one being NY) that will reject 1099-R's with a state tax and a blank box 14 so it is okay to enter the box 1 amount into box 14 to satisfy the states requirement.

Thank you! I only wish I would have read that last line beyond the numbered lists first.

Thank you so much.  I kept editing and it wouldnt work.  The key to your answer was to DELETE and start over, and it worked perfectly.  I was going crazy.  So many thanks to you

I followed your advice, and similar suggestions from others to the letter and it does not work.  The amount reported on the 1099R continues to remain in 4b.

I deleted the 1099R and started over again following the directions.  My RMD for 2020 continues to show up on line 9 (total income) in spite of several attempts.

On my latest attempt line 4a remains blank, but 4b has the amount originally distributed and rolled over.

One suggestion in a newspaper article was to complete 4b with the 1099R amount, leave 4b blank and write in "Rollover".  This is what you say Turbo Tax will do, but has not done so on my return.

Any suggestions?

Thanks

You must first delete the 1099-R and re-enter it.   Answer none of this was a RMD.

If not deleted it will remember the prior answer.

DanaB27 would you please help me with reporting in desktop version 2020 the following:

total rmd withdrawal $28,450

this is what was done with $28,450:

Fed inc tax withheld $1,700

Qualified Charitable Distributions $11,450

Roll over (roll back) into IRA  $15,300

I greatly appreciate your help

Alex

@alex2701  What type of problem are you having?   

Do you not get the RMD or QCD question?    If that is the problem is your date of birth between July 1, 1949 and June 30, 1950?  If it is then there is a TurboTax bug and there is  workaround.

I am having the same problem and will appreciate any further information that any of the community can add to how to get the return of the RMD to show up in my tax return.  I did a IRA to Rorth IRA conversion after returning my RMD so the tax money taken out with the RMD will simply go to the conversion but my 1099R says I did both... Any help appreciated

evergreens, a Form 1099-R that (properly) reports the combination of distributions that were rolled over and were converted to Roth is something that TurboTax is not programmed to accommodate.  To be able to use TurboTax to report this you must split and enter this Form 1099-R as two Forms 1099-R, one for the portion rolled over and the other for the portion converted to Roth.  The dollar amounts on these two separate Forms 1099-R must total to the same amounts as are in the corresponding boxes of the original.  The amounts in boxes 1 and 2a must equal each other.

Thought we had until 8/31/20 to return RMD??

Thank you for responding to my returning RMD  and so quickly about having the full return and then converting that amount to a Roth IRA, my 1099R had both totaled on that one form.  You tell me that I have to split it, so do I ask my financial institutions to split the transaction into two 1099Rs??? or do I take half  of the issued 1099R and treat it as one, and do the same with the other?  Evergreens

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@evergreens wrote:

Thought we had until 8/31/20 to return RMD??

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That is correct - 8/31/2020. was the cutoff date.  Nobody has said otherwise.

Did you convert ALL the money to the Roth of did you do a combination of things - (convert some and keep or roll back some)?

No, you do not ask the custodian to change the Form 1099-R, they prepared it correctly.  You must split it yourself for entry into TurboTax.  If the amount rolled over and the amount subsequently converted are the same, your two split Forms 1099-R will simply have half of the originally reported dollar amount in each of the boxes 1 and 2a on the forms that you enter into TurboTax in place of the original.

The only way to get the right questions to come up regarding what you did with the RMD is to DELETE the 1099-R you have put in, enter it again, then check that it was not an RMD. It then asks what you did with the money.

Macuser22

I appreciate your help

Assume the following:

$16,000 gross distribution from IRA

$1,000 of the distribution Fed tax sent to IRS by custodian

$5,000 was donated to qualified charities (QCD)

$10,000 of the distribution was rolled over / rolled back to IRA

So my total net distribution is $6,000 ($1,000 tax+ $5,000 QCD)

And my adjusted gross income is only $1,000 (because the $5,000 is tax free)

In TT for Mac desktop version :

Federal taxes tab  > Wages and income  > pension plan withdrawal 1099R:

Q: Did did you receive form 1099R? I selected Yes (if I select No it moves me to another subject)

I then proceed fill out form 1099R:

16,000 gross distribution (in boxes 1 and 2a and check tax amount not determined)

1,000 tax withheld (in box 4)

In box 7 - (7 normal distribution) and check the IRA/SEP/simple box

Next screen “did you inherit the IRA”?  I select No

Next screen “what did you do with the money?”: selected “I moved the money to another or same account”

And then I select “I did a combination of rolling over converting or cashing out the money”

Then in “tell us how much of the $16,000 you moved etc.” I entered 10,000 in the first box “amount rolled over etc.

(I do have a form 5498 that shows the $10,000 rollover)

Done with 1099 and it shows a $16,000 Gross distribution

Form 1040 shows:

Box 4a “IRA distributions” $16,000

Box 4B “taxable amount” shows an “Explain’ stamp followed by “ROLLOVER” and $6,000 in column 4b

Box Column 11 shows adjusted gross income of $6,000

Line 25 B does reflect the $1000 Federal income tax withheld 

So my questions are:

where do I enter the qualified charitable distribution of $5,000 so that my 2020 distribution from the IRA  and my (AGI) of the $1,000 is reflected on form 1040?

Also what do I do with “Explain” stamp in box 4b?

I greatly appreciate your help.