How to answer TT questions about RMD on inherited IRA I liquidated immediately?

[dcl766]

Mom died in November 2018, I inherited part of her IRA January 2019 and liquidated the full amount immediately. Tax form has a “4” in Box 7.

Questions are:

Question 1:

Was this withdrawal an RMD?

Yes, some or all of this withdrawal was an RMD.   No, none of this withdrawal was an RMD. (This is not common.)

I want to say “No” since it wasn’t a RMD.

Question 2:

Tell Us More About This Retirement Plan Distribution

David needed to take a required minimum amount of money from any qualified employer plans or traditional IRAs, or be subject to a 50% tax. This is called a required minimum distribution (RMD). If you didn't take the full RMD, we'll help you request a waiver of the tax.   Include needed required withdrawals from any inherited retirement accounts in your answer below.   Select one of the following:

David received all the RMD for 2019 David did not receive all the RMD for 2019 David was not required to take an RMD for 2019

I want to say David was not required to take an RMD for 2019.

[AmyC]

Questions 1: Yes, some or all of this withdrawal was as RMD.

Every IRA has an RMD. Because you liquidated the entire amount, you definitely took out more than the RMD. When the software asks, it is looking for amounts less than the RMD in order to calculate the penalty. 

Question 2: David received all the RMD for 2019. You did not have other accounts where money was taken but not the full amount. You took at least the Required Minimum Distribution from all accounts, as required.

[dcl766]

Thanks!

when I answer question one “yes” it comes up with another question and if I answer that it WAS part RMD it wants to know the amount of the RMD which I don’t know:

Tell us how much of the $23,427.30 David received applies to the RMD that needed to be taken out.

	All of this distribution was an RMD Part of this distribution was an RMD

Enter below how much of the $23,427.30 David received applies to the RMD.

RMD Amount

[JulieS · Accepted solution]

Since you took out the balance of the account, the amount that was an RMD, isn't really important. You can answer that all of it was an RMD, or you can say part of it was an RMD, that is more accurate, but then you need to enter your RMD amount.

The trustee of the account should have told you how much you have to take out, that would be the RMD, but if you don't have that information you can just estimate the amount. 

The RMD is based on your age. If you are 60 it is about 4% of the account value. If you are younger it is less, if you are older it is more. There are RMD calculators on line if you want to be precise. 

One thing you should know is that, no matter what you answer, the information is only used to see if you owe penalty. These numbers don't appear on your tax return.

Since you took the full balance of the account you do not owe a penalty.