Entry of any RMD Amount Due is charging a 25% penalty

[janicelehman]

I have multiple retirement accounts comprised of pensions and 2 IRAs, one inherited and one mine.  I have taken out more than the owed RMD amount from each IRA individually so it is unlike the problems being reported where it is not adding up the amounts withdrawn from multiple IRAs.  In my case, it is handling this wrong on 2 separate IRAs when I have withdrawn from both more than was required for that specific RMD. In both IRAs, when I get to the screen asking for the RMD due Dec. 31, whatever value I enter, it immediately penalizes me and adds 25% of that to my tax owed, even though I have withdrawn more than that amount.  For example, if I enter $100 into the RMD due field, it bumps up my taxes owed by $25. This happens for both IRAs.  

I know I don't owe a penalty.  If I enter 0 in the RMD due Dec. 31 field, it does not access a penalty which it shouldn't, but then the value in that field is wrong.   I can do that but was hoping others might have run into this problem and have a better solution for me.

Thanks!

[janicelehman]

Hello.  I haven't gotten any replies to this so I thought I'd send something and hope someone might see it this time and respond.  Thanks!

[DawnC]

That issue is still being worked on - you can sign up for notifications from the link below.   These two RMD issues are still being addressed.  The first may apply to your IRA and the second one may apply to the inherited IRA.  

Why am I getting an RMD distribution amount error?

Why am I getting an error when entering Form 1099-R box 7 code 7D?

[janicelehman]

• Thank you.  Neither of these are the situation I am asking about. I don't receive any error messages. It just automatically adds a penalty to my taxes owed as soon as I hit enter after entering my RMD Due amount.  Will this fix be included in the other RMD fixes?  Thanks!

[AmyC]

It adds a penalty when you haven't taken the full RMD. The question is, did you take the full RMD? 

If yes, return to the screen where you entered the form.

• RMD = distribution - You can mark the RMD is the same amount and all of it went to RMD, there is no penalty.
• If the RMD is less than what you took, enter the smaller RMD, enter that NOT all of it went to RMD but $XX = RMD did.

For example: $1000 distribution with a $600 RMD. Enter not all of it but $600 toward RMD. Program is happy. 

You can't say all of it and have a lower RMD. Review your answers.

If you did not take the full RMD, you would have a penalty.

[janicelehman]

Thank you.  I have paid more than the required RMD. When I get to the last screen in the RMD section, it never asks me if I paid the full RMD.  It only says " If John's account was subject to an RMD, we need to know the amount that was required to be distributed by Dec 31, 2024.  Do not include RMDs which are due on April 1.  RMD due by Dec. 31, 20024" and then there is a box for me to enter an amount.  If I put anything besides 0 in that box, it immediately adds a 25% penalty of whatever number I put in that box. I have tried putting in the same amount that I withdrew, and it adds a 25% penalty of that amount. I am using Turbo Tax Deluxe on a PC.  What would cause it never to ask if I paid the full amount or not?   I have read many posts about people talking about the question if whether they paid the full amount,  but I never see that in my version of Turbo Tax and I am current with my updates.    What could cause that?    Thanks!

[kaldrich62]

the same thing is happening to me as well. Its keeps adding a 25% penalty even though I took the entire RMD plus paid fed and state taxes on the RMD. 

[MarilynG1]

The IRS allows you to take your RMD from one account or across several; they don't know what your RMD should be (nor does TurboTax).  They expect that you and your plan administrator assure that you take it as required. 

You just need to get TurboTax to accept your entries and not generate a penalty. 

I would advise deleting/re-entering your 1099-R's.  When TurboTax asks if  'all or part was RMD'  the easiest approach is to say 'all' and then enter the full distribution amount as the 'RMD' amount.

If you're using TurboTax Online, clear your Cache and Cookies before returning to this section after deleting. 

Here's more info on IRS Requirements for RMD's.

@janicelehman 

@kaldrich62 

[janicelehman]

Thank you.  I have deleted them and manually entered them, putting the full amount of my withdrawal, which was more than my RMD required amount, into the RMD Due on Dec 31 field and it still penalizes me 25% of that amount.  Aside from the penalty,  another strange thing is that it never asks me if that is "all or part of my RMD".  It only says "If John's Ameriprise account was subject to a RMD, we need to know the amount that was required to be distributed by Dec 31, 2024 from the Ameriprise account.  Do not include RMDs which are due on April 1. RMDs for the first year you're required to take a distribution are generally due on April 1.   RMD due by Dec. 31, 2024 _____".   Maybe if we can figure out why it says this and never asks me if it is all or part,  that will help solve the problem of it not working right.    If I put a zero in the RMD due field, it doesn't add a penalty and looks to me like my final forms are correct, but the fact that I am not answering the question correctly makes me uncomfortable that something will be wrong behind the scenes that I'm not aware of.  Please let me know what you think.   Thanks!

[DanaB27]

There was an issue with inherited IRAs but this was fixed on Friday. Please try to delete and reenter the Form 1099-R for the inherited IRA.

 Please follow these steps:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “1099-R”
3. Click on “Jump to 1099-R” and enter your 1099-R
4. Enter the RMD amount for this account on the "Let's get more information about your Required Minimum Distribution (RMD)" screen
5. Continue until "How much of this distribution applied to your December 31, 2024 RMD?" screen and select "The entire distribution was an RMD" /or select "Only part of this distribution was a RMD" and enter the amount of RMD 
6. On the "Here's your 1099-R info" screen click "Continue"
7. On the "Did You Miss a Required Distribution From Any Retirement Accounts?" screen select "None of these plans failed to withdraw the RMD" if you met all of your RMD for 2024, otherwise select what is applicable. 

@janicelehman 

[janicelehman]

Thank you. I took the update.  Then I deleted both my inherited and my own 1099-R and then manually added them.  It is behaving like it did before.  It adds a penalty when I put in anything besides 0 in the RMD due field.  Also, it never asks me the questions you said it should.  It still asks me the same questions as I documented above.   

[fanfare]

To avoid penalty, for each 1099-R, tell TurboTax that distributed amount is the calculated required amount.

@janicelehman 

[DanaB27]

Please try fanfare's suggestion. If you are still having issues after that then it would be helpful to have a TurboTax ".tax2024" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

The instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

@janicelehman 

[tvromero]

Yep, I have the same problem.  Please tell me exactly where the "TurboTax that distributed amount is the calculated required amount." button is found because I too was not asked that question.

Any mount added into the RMD minimum amount box is then being taxed.  I assume the function should just add a penalty if the RMD amount was not fully withdrawn.  

[tvromero · Accepted solution]

I got it solved.  When you enter the amount into the required RMD box, it will change the tax due.  In the very next screen it will ask "How Much of This Distribution Applied to You December 31, 2024 RMD?"  Answer that as "The entire....." and the tax due will reduce.  

IMO, turbotax should not increase the tax due UNTIL this final question is asked since it creates confusion when the tax due increases, just to decrease in the next screen.