I have multiple IRAs. In total I have withdrawn my full RMD but not the full RMD from one of my three IRAs. Why is TurboTax calculating a penalty?

[plpollack]

I re-opened my 2023 file and it seems that TTax simply did not ask for RMD per account in 2023, just if the w/d amount was to satisfy RMD.  Did I get this right?

[DawnC]

That is correct @plpollack  There was a change in how TurboTax asks about the RMD from the 2023 version.   The per distribution/account questions are new this year.   But as you know, changes are being made to the retirement section, which will soon, hopefully, eliminate the issues the change has caused.  

[wja]

Sounds right.  The 2023 version did not ask for the RMD.  This may be a new requirement from the IRS.  Anyway, someone at TT overlooked this new entry and it has caused the TT software to not properly calculate the aggregate of distributions.  Poor quality control on the part of Intuit.  It has caused lots of pain for TT customers.  Strictly my opinion.

2/16/25

[Packerfan15]

DaveF1006 Said This is an known issue that is currently being investigated.  Please select this link to sign up for updates so we may notify you when this will be corrected. 

It has been two or more weeks this issue was raised.   TT is delaying people from filing their taxes and getting refunds.  If they can't fix this this week, Feb 17th, then I think we should all get refunds for this program and let us move on to H&R block.  I am tired of all these stupid workarounds.  Fix the program.

[VolvoGirl]

Turbo Tax changed this year. When it asks about the RMD it is only asking for that one 1099R. You need to enter the amount in box 1 on that single 1099R for the RMD, not the total RMD for all. Even if they would add up to more or less. And maybe try leaving the cents off both the 1099R and the RMD questions.

Use Expert DavidD66 excellent answer here,
https://ttlc.intuit.com/community/retirement/discussion/re-rmd-mismatch/01/3488686#M234445

[tat000]

My career in IT makes me ask what is meant by "soon" and "hopefully". 

What is the status of the fix -- in queue, in design, in coding in testing (hopefully it gets tested), ready to distribute?

What is the planned release date?

Please add COMMUNICATION to your efforts on this fix.

[dan_in_MI]

You continue to recommend using the box 1 value for the RMD value. This is about the worst thing you can do. It screws up the follow on decisions for total RMD, Roth Conversion amount, and if you did a rollover the amount you rolled over. The consequences of following this advice are worse than the original problem.

Plain and simple, using Box 1 values does not work for most people.

[dan_in_MI]

Hi VolvoGirl,

It is really nice of you to put in all this effort to help people. Unfortunately  I think you have been misinformed by David's post that you referenced. Please try this example to see what I am talking about. It is very simple.

Assume you have a 1099r with $300,000 in box 1. The value results from a $50,000 RMD distribution against a $50k RMD requirement, plus a $250,000 rollover to a different traditional IRA.

Make sure the birth date is set so the RMD questions are triggered. Then enter the 1099r data and anwser  $50k for the two RMD questions, stating that the remainder is rolled over into another traditional IRA. In this case only $50k will be taxed as income.

Now do the same thing, but put in the box 1 value of $300k for the two RMD numbers. This time you will not get the question "what did you do with the rest of the money", because there is none left. In this case all $300k is taxed as income.

Using box 1 for the RMD results in a huge erroneous tax bill.

The solution does eliminate any RMD penalty, but the end result is a much bigger error for this situation.

I just did this myself and I am certain this is what happens.  Please let me know if I am missing something.

Thank you for your patience.

[Holintax]

Dan in MI

I rolled over IRA funds from one company to another in 2024 as a "trustee to trustee" transfer. I did not receive a 1099R from either company. A "trustee to trustee" transfer shouldn't initiate a 1099R. 

[fanfare]

The issue is that the distribution amount is less than the RMD, not more.

The workaround depends on the fact that the taxpayer knows the RMD has been satisfied.

In your example the taxpayer is not going to enter RMD was $300,000, that would be foolish

@dan_in_MI 

[VolvoGirl]

@dan_in_MI   The RMD  calculations only work (or aren't working right)  if all your 1099Rs are only for the RMD.  If you have other distributions like rollovers, QCD, conversions on the same 1099R  you probably need to split the  1099R up and enter a separate 1099R for each thing.  @dmertz  can you weigh in?   

[fanfare]

@VolvoGirl 

dmertz already said he won't comment on sloppy turbotax programming,

see my other comment just above.

[dan_in_MI]

You are right. I'm not a tax expert so I should probably stay quiet. I was just trying to show that using Box 1 does not always work, and can actually be quite terrible for some people. I am looking forward to hearing the result of that discussion.

A quick internet search says that a 1099r is not provided for trustee to trustee transfers. It is generated for approved employer plan distributions(rollovers), or if the IRA owner takes a distribution himself and rolls it over into another IRA within 60 days. I think both cases result in distributions on the 1099R that are not taxable income. That is all I was trying to show, and I did use an unclear example.

[dmertz]

I don't think that you would need to split the Form 1099-R for QCDs and rollovers.  The trick is entering as the required amount an amount that causes TurboTax to behave appropriately.

[dan_in_MI]

I think we are in agreement.

Using Box1 of $300,000 for the RMD amount that was $50k would be foolish, and could cause serious downstream problems. I was just trying to point out that the advice to use Box 1 as the RMD amount is a bad idea as a general rule.