How to i enter the return of a required minimum distribution from an inherited IRA?

[tedmpaul]

i took the RMD and received form 1099-R. However distribution was returned once the CARES act passed.

[ColeenD3]

You will encounter a screen in the 1099-R interview portion that asks what you did with the money. You can indicate that you rolled it over. You must have done it within 60 days.

The CARES Act waived 2020 required minimum distributions out of retirement accounts. Some who took those RMDs were able to roll them back into their IRA or 401(k) under the 60-day rollover rule. The IRS will also allow beneficiaries of inherited IRAs to roll back this year's distribution into the account.

[jdalabama]

My turbo tax deluxe does not permit documenting rollover of IRA RMD for 2020. Instructions say just answer questions on what I did with the funds as I enter the original 1099R.  But these questions are never presented so that I could answer them

[PattiF]

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.

[jdalabama]

My problem is after entering the 1099R info  it never gets to "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)"

Instead it asks if this is an inherited IRA RMD, which it is, then launches into several questions about previous owner and never asks what I did with the funds

[jdalabama]

does this even after deleting the 1099R entry and tying it again as a new entry

[DaveF1006]

It depends. Please read this IRS link as it details how to treat an inherited IRA. Rules are different depending on if the deceased was your spouse or non-spouse.

Inherited from spouse. If a traditional IRA is inherited from a spouse, the surviving spouse generally has the following three choices:

1. Treat it as his or her own IRA by designating himself or herself as the account owner.
    
2. Treat it as his or her own by rolling it over into a traditional IRA, or to the extent it is taxable, into a:
         a. Qualified employer plan,
         b. Qualified employee annuity plan (section 403(a) plan),
         c. Tax-sheltered annuity plan (section 403(b) plan),
         d. Deferred compensation plan of a state or local government (section 457(b) plan), or

3. Treat himself or herself as the beneficiary rather than treating the IRA as his or her own.

If a surviving spouse receives a distribution from his or her deceased spouse's IRA, it can be rolled over into an IRA of the surviving spouse within the 60-day time limit, as long as the distribution is not a required distribution, even if the surviving spouse is not the sole beneficiary of his or her deceased spouse's IRA.

Inherited from someone other than spouse. If the inherited traditional IRA is from anyone other than a deceased spouse, the beneficiary cannot treat it as his or her own. This means that the beneficiary cannot make any contributions to the IRA or roll over any amounts into or out of the inherited IRA. However, the beneficiary can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary.

[gatorlynch]

Anybody figure out a solution to this?

With an Inherited IRA, distribution code 4 is checked in box 7.

This seems to not allow the whole tell us what you did with the money option ...

[bobweissman]

---

@gatorlynch wrote:

Anybody figure out a solution to this?

With an Inherited IRA, distribution code 4 is checked in box 7.

This seems to not allow the whole tell us what you did with the money option ...

---

Yes, I figured this out today after beating my head against the keyboard for a few hours.

You must go back and tell TT the IRA is not inherited. Inherited IRAs are generally not eligible for rollover. This is a tax year 2020 exception which is not programmed into TT.

[SmartRealtor]

Thanks to the community for help with this in TurboTax.

[dcphipps]

I inherited my mother's Traditional and Roth IRAs. I began taking distributions from the traditional IRA in 2021, trying to space it out over the ten-year required time. I'm stuck on the question below. How should this be answered? It seems like the question is geared to a person who is taking distribution of their own IRA, not an inherited one. I am 60 years old. 

[RaifH]

A beneficiary of a retirement account is responsible for taking the required minimum distribution. The calculation varies on whether the original owner was taking RMDs before they passed away. The IRA custodian may have calculated the RMD required for you and that may appear on their paperwork or in your online account. If they have not calculated it and you are not sure if you took enough, you can calculate it manually using the IRS publication. If you do not take the entire RMD, the undistributed amount remaining is subject to a hefty 50% penalty. To calculate it, use your age at the end of the year following your mother's death. Find the corresponding life expectancy on the table that begins on page 46. Reduce the life expectancy by one for each year after your mother's death. Divide the amount in the retirement account by your life expectancy. That is the RMD, and if you withdrew more than that then you are not subject to any penalties. There is an example on page 11 that you might find helpful. Based on your age, if you took more than 4% of the total account value this year from each account, then you should be okay. You can calculate the exact number following the table. 

@dcphipps

[survivor77]

Wow, I hope this still works.  Here we are in 2023 and I am having the same issues with TT wanting me to pay the required minimum distribution on my dead parents' lump sum pension payments with no errors found(!)  I think part of the problem is the breadth of possibilities being crammed into the 1099R category though...

[survivor77]

Nope, doesn't seem to work anymore.  These are either regular plans or represent the entire payout, btw...  I can't imagine all four issuers of 1099Rs are incorrect and TT is second guessing everyone by having me pay an additional $2500 as being right.  Seems like a glitch to me.

[LindaS5247]

Some of the older posts here are for COVID years, when there were some different rules and exceptions so they may not apply.

How to I enter the return of a required minimum distribution from an inherited IRA?

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"

You should be able to enter your Form 1099-R and then answer the follow-up prompts for TurboTax to properly account for it.

You will be receiving form 1099-R and it needs to be reported as such; please be sure to enter the form information into Turbo Tax exactly as it appears and answer the follow up questions. The tax treatment of the inherited IRA depends on whether it was inherited from a spouse or a non-spouse.

1.       Federal Taxes

2.       Wages and Income

3.       Select Jump to Full list

4.        Scroll down to Retirement Plans and Social Security

5.       Select IRA, 401(k), Pension Plans (1099-R)