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

[janicelehman]

Thank you!  That solved it for me, too.  I guess I never thought to go to the next screen since it was so aggravating to see the tax owed go up so much when I made the RMD due entry.   Thank you for replying to this message! 

[MaxBuck]

My problem is that, although my wife is too young to have an RMD requirement (she's 71), TurboTax is calculating one and telling her there's a tax on "excess accumulations in retirement account." The program then cites the RMD rule as the reason behind this. What's the solution?

[VolvoGirl]

@MaxBuck   What code is in box 7?  Did she inherit this IRA?   Go back and check her birthdate in My Info or Personal Info.    Try  deleting the 1099R and enter it again Manually.  That might fix it especially if you imported it.  

[MaxBuck]

Code in Box 7 is 4-Death. I've gone ahead and documented that the entire distribution applies to the RMD, but the program still calculates a penalty.

[DanaB27]

I like to take a look at your return to see what is going on. 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.

@MaxBuck 

[MaxBuck]

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  

This option does not appear under "Online" in my version of TurboTax (Premier). 

[DanaB27]

To clarify you are using TurboTax Desktop? And are in your 2024 return?

@MaxBuck 

[etlowe]

@DanaB27 

I also have encountered a similar issue with an RMD penalty for a satisfied 2024 RMD.

I am using TurboTax Deluxe as a Desktop application. The 1099-R for Vanguard includes Box 7 Codes for G and 7. The Vanguard account was a 401K that was rolled over to a Traditional IRA. The RMD was taken in full as a distribution before the rollover (6/2024) and the end of the year. 

I have reviewed many of the Community Q&As but have not seen a comparable case with a working solution.

My token number is 4125639-77311314

Appreciate your assistance to help resolve this problem.

[etlowe]

@DanaB27 

Token for my support issue is 4125639-77311314

It was deleted when I submitted my prior Reply

Thank you

[etlowe]

@DanaB27   Here is a screen shot. 

[MaxBuck]

The problem appears to be that TurboTax is calculating the RMD for inherited retirement accounts incorrectly. Please fix this! The amount we withdrew is far in excess of the RMD for this account. I'm waiting to complete my taxes on TurboTax getting this right.

[DanaB27]

Thank you @etlowe. I reviewed your return. Your Form 1099-R should not have both code 7 and G, the custodian issued this incorrectly.  Please see 1099-R instructions for details. You should have received a 1099-R for the RMD distribution with code 7 and another 1099-R for the rollover with code G. You should contact the custodian. Once I enter a separate Form 1099-R with code 7 (for the RMD) and a Form 1099-R with code G (for the rollover) the penalty is removed from Form 5329.

Please see How do I file an IRS tax extension? 

@MaxBuck Thank you. I reviewed your return. To clarify, both inherited IRA's were inherited from the same person? If yes, then you can use one inherited IRA to meet the minimum for another since they were both inherited from the same person.  

But if you do take the minimum amount from the other inherited IRA, you may have to adjust how much you report taking from each. For example, if each IRA required $20,000 but you took $30,000 from one and $10,000 from the other, you would report $30,000 and $10,000, respectively, as the RMD for each account. The total RMD you report for all IRAs inherited from the same person must match the actual total, even if the amounts from specific accounts vary.

To clarify, did you take all the RMD for the inherited IRA's? Because if I combine the RMD amount entered it is more than the distribution of the two IRA's? 

If you took all the RMD for 2024 and both IRA's were from the same person then you would enter the distribution amount on the RMD for this account screen and then select all of it was applies as RMD.