How enter an RMD for an account where no 1099-R was issued because there was no distribution and distribution from another account.

[Fiberglass72]

I’m not sure TurboTax multi-IRA distribution problem is completely fixed.  It seems to work for a fairly simple case, but that’s not what I have. 

Here’s my case (using imaginary figures), and I NEED HELP to find a way to make TurboTax to work:

• I have three IRAs.  Let’s call them IRA-a, IRA-b, and IRA-c
• IRA-c was funded mid-year by a transfer of funds from IRA-b to IRA-c
  • That means IRA-c has no RMD (because it’s value was zero on 12/31/24
• Overall 2024 RMD requirement:  $30,000 (set by the IRA values on 12/31/2023)
  • RMD for IRA-a:  $20,000
  • RMD for IRA-b:  $10,000
  • RMD for IRA-c:   $0 (because it’s value was zero on 12/31/24)
• Total DISTRIBUTIONS taken in 2024 and shown on the 1099Rs:  $60,000
  • 1099R for IRA-a: $35,000 distribution
    • $30,000 of the distribution was via QDCs for IRA-a
    • I took an extra $5,000 in the distribution to cover a RMD shortfall from 2023
  • No 1099R sent for IRA-b because I did not take any distribution from that IRA
  • 1099R for IRA-c:  $25,000 distribution
    • I chose to take a $10,000 distribution from IRA-c to cover the remaining part of my overall RMD not covered by QCDs
    • $15,000 distribution for a Roth conversion

The desired state (I think) on Form 5329 “Part IX Additional Tax of Excess Accumulation Smart Worksheet”:

RMD for Account:           Distributions:                  Undistributed RMD

From Form(s) 1099-R     $20,000                             $30,000                             $5,000

Additional (enter):          $10,000                                                                        $25,000

Total:                                 $30,000                             $60,000                            

I followed very clear example provided by DanaB27 in this way:

• For IRA-a: 
  • “Required Minimum Distribution” screen:  $20,000
  •  Marked “The entire distribution applied to the RMD”
  • Marked “part of this distribution transferred to charity”
  • QCD screen:  $30,000
  • “How much of this Distribution Applied” screen:  entire amount
• For IRA-b: No 1099R so no entry and no place to make an entry
• For IRA-c: 
  • “Required Minimum Distribution” screen:  $0
  •  QCD screen:  None
  • “What did you do with the Money” screen:  marked “combination of rolling over, converting, or cashing out the money”
  • “Amount converted to a Roth IRA account”:  $15,000
  • “How much of this Distribution Applied” screen:  entire amount

Here is what the 5329 Smart Work shows:

RMD for Account:           Distributions:                  Undistributed RMD

From Form(s) 1099-R     $20,000                             $35,000                             $0

Additional (enter):          $25,000                                                                        $25,000

Total:                                 $45,000                             $35,000                             $10,000

I realize that this example sounds like the examples the IRS uses in their instructions (cram every possible scenario into one example).  But, that is really the case I have.  I sure wish I had not done it this way, because I had no idea of the tax reporting chaos I was inflicting on myself.  I won’t do it this this in the future!

PLEASE, someone give me some help where I can file my taxes.  I am willing to use the TurboTax interview method or put the information directly into the IRS forms via the forms method.  I just need the knowledge of how to proceed.

[DanaB27]

It seems you entered $25,000 instead of $10,000 on the "Total RMD for all other IRAs" screen (enter the RMD from your other IRAs where you didn't take a distribution from). This should be the $10,000 RMD for IRA-b where you didn't take a distribution.
 

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R” and enter your 1099-R for IRA-a
3. On the "Required Minimum Distribution" screen enter RMD for this account $20,000
4. On the "How much of This Distribution Applied to your December 31, 2024 RMD" select select "The entire distribution applied…"  
5. Answer the "Transfer to Charity" screen select "Part was transferred to charity" 
6. Amount transferred to charity enter $30,000
7. On the "Your 1099-R Entries" screen add the 1099-R for IRA-c
8. On the "Required Minimum Distribution" screen enter RMD for this account $0
9. Answer the "Transfer to Charity" screen select "None was transferred to charity" 
10. On the “What Did You Do With The Money” and choose “I moved it to another retirement account”
11. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the converted amount next to "Amount converted to a Roth IRA account" (S15,000)
12. On the "Your 1099-R Entries" screen click "Continue"
13. On the "Did You Miss a Required Distribution From Any Retirement Accounts?" screen select "An IRA..."
14. On the "Total RMD for all other IRAs" screen enter the RMD from your other IRAs where you didn't take a distribution from ($10,000 RMD for IRA-b).

You are not required to file Form 5329 since you met all of your RMD. TurboTax will enter the information in the "Additional Retirement Account Smartsheet" to check that you met the RMD. You can see this in TurboTax Desktop when you switch to form mode and look at Form 5329 but this will not be sent to the IRS.

When I enter it with the steps above I get this and it show the RMD for 2024 was met and Form 5329 will not be filled out and not sent to the IRS.

Note since you indicated IRA-c doesn't have a RMD it is not included here and you do not get the "How much of This Distribution Applied to your December 31, 2024 RMD" screen to indicate that you used this distribution towards the RMD. But the distribution from IRA-a covered all of your RMD for 2024 so this still shows you took all your RMD. And as mentioned before the Smartsheet is only for your records and does not get sent to the IRS.

[Fiberglass72]

Thank you very much for your very quick response and your help.  Unfortunately, in my real data, the distribution from IRA-a did NOT cover the full  RMD.  The problem would be more accurately stated if my example had a RMD for IRA-b of $18,500.  That would yield a total RMD of $38,000 instead of $30,000.  That leaves a sort fall of $3,500 in the “Undistributed RMD column.

So my 5329 Smart Worksheet would show:

                                         RMD for Account:           Distributions:                  Undistributed RMD

From Form(s) 1099-R      $20,000                             $35,000                                $0

Additional (enter):           $18,500                                                                  $18,500

    Total:                               $38,500                             $35,000                         $3,500

That means the dreaded   "Was a corrective distribution made for your IRA accounts?" screen appears, since line 53a of Form 5329 only shows the $35,000 distribution.  How can I cause TurboTax to include the $10,000 distribution I took from IRA-c?  That additional amount will easily cover the $3,500 “shortfall”. 

Is there a way for me to just correct this directly on the Form 5329?  Would editing Line 53a on the form to show the additional $10,000 distribution taken from IRA-c be a possibility ($45,000 new total)?  If so, how do I make that edit?  I can’t find a way in TurboTax to enter data on that line.

Or am I required to mark, “Yes, a corrective distribution of the shortfall was made within the window.”  And then, “Yes, I would like to fill out a waiver.”  Then input the “3,500” in the “RMD Amount for Extra Tax to be waived” box, and add an explanation.

Could you please provide some guidance for the best way to work through the process?

By the way, I am using TurboTax Deluxe on a Windows machine.

Thank you very much in advance for your additional coaching!

[MarilynG1]

Neither the IRS nor TurboTax knows what your RMD should be.  They expect you and your plan administrator to distribute the correct total RMD.  The IRS states that the RMD can be taken from one account or across several accounts.  Here's more on IRS Requirements for RMD's.

If your RMD is 30K, for example, and you have a distribution of 20K on one 1099-R, you can indicate that the RMD is 20K (total distribution is RMD).  If you have another distribution for 15K, you can enter that 10K is the RMD amount.  You have now met your required RMD, and don't need to worry about 'undistributed RMD' from any particular account.  

You should have no errors or worksheets to complete. 

@Fiberglass72 

[Fiberglass72]

MarilynG1,

Thank you very much for your response!

I agree with your statement about the IRS not knowing the value of my RMD and that the RMD can be taken from multiple accounts.  It is an easy calculation, and I agree with the data provided by my plan administrators. 

After carefully reading the IRS instructions for Form 1040, I can now see that TurboTax entered the correct numbers on line 4a and 4b for the 1099Rs.  HAPPY!!

That said, it appears there is still a data problem with TurboTax.  Please see the example on my previous post which showed for IRA-a, IRA-b, and IRA-c, the total distribution was $60,000 ($35,000 from IRA-a and $25,000 from IRA-c and $0 from IRA-b). 

It looks like TurboTax only included the $35,000 from IRA-a, but did NOT include the $25,000 distribution from IRA-c.  Maybe that was because there no RMD required from IRA-c?  Shouldn’t the “Distributions” column on the Form 5329 worksheet show the total distribution of $60,000 (vs. the $35,000 that it shows)?  That creates a $3,500 shortfall between my RMD and the total distribution, and that causes an extra $350 in tax (shown on Form 5329 Line 54a, which then flows through to Form 1040 Line 23).

Is there a way for me to fix this in the Forms method?  Or have I entered something incorrectly?

As a side note:  Line 44 on the “1099 Summary” appears to be incorrect.  It only shows the $20,000 RMD from IRA-a but not the “Additional” $18,500 RMD from IRA-b (where I didn’t take a distribution; so there wasn’t a 1099R created).

I look forward to your advice!

[MarilynG1]

You are correct that only the 1099-R's that you enter in the program will show on the 1099-R Summary.  Therefore, if you received your total RMD, you should indicate that in the follow-up questions by adjusting the amount of RMD between the two distributions you did take for the total, or indicating that you took the total RMD from one account.

For example, if your total RMD is 50K, and you had one distribution of 35K and another of 25K, you could indicate the RMD for the first distribution is 35K (same amount as distribution) and the RMD for the second distribution as 15K (to total the 50K required), even if this is not correct for each account.  You have taken your total RMD in 2024.

I would suggest that you delete your 1099-R's and re-enter them.  This will make Form 5329 go away, as obviously you don't have a shortfall in meeting your RMD requirement. You could do this in FORMS mode if you like, but sometimes it's more meaningful to step through the questions in interview mode.  You could delete the 1099-R Worksheets and Form  5329 in FORMS, then step through the interview to re-enter.  

@Fiberglass72 

[fanfare]

The actual distributions didn't matter [ in the past ]

It is the shortfall that has to be reported.

The new form is confusing.  It looks like if you resolved the issue you use the a) lines and

if you did not resolve the issue yet you use the b) lines

It again probably doesn't matter because Line 54 will be zero after waiver request.

@Fiberglass72 

[Fiberglass72]

The issue occurs when you  enter $0 RMD for IRA-c  (see previous post) so you do not get the "How much of This Distribution Applied to your December 31, 2024 RMD" screen.  Here is how I resolved the issue by entering $1 on the "Required Minimum Distribution" screen to trigger the next question.  That made Turbotax supply the correct entries.  DanaB27 is the one that came up with the work-around.

[fanfare]

Don't enter zero for the RMD of a 1099-R, even if the previous 1099-Rs were over the minimum.

In the absence of QCD, to avoid penalty, for each 1099-R, tell TurboTax that distributed amount is the calculated required amount.