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 In total I have withdrawn my full RMD but not the full RMD from one of my three IRAs.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?

[dan_in_MI]

The only way I have found to make this work with multiple IRA accounts is to fabricate values for each account that follow these rules.

For each account

-the total RMD required is equal to or less than the total distribution

-The RMD taken is exactly equal to the required RMD

Aggregated values:

-Total RMD is equal to the sum of all account RMD requirements

-Total RMD distributions are equal to the sum individual RMD distributions of all accounts

Any situation that one account has less RMD distributions than the required RMD for that account will result is a penalty, whether it is deserved or not.

Turbo Tax MUST fix this. I am not going to fabricate numbers for my tax return.

[dan_in_MI]

To follow your last recommendation, Should the amount from box 1 be entered as the RMD required, or the RMD taken?

[VolvoGirl]

Probably both.  I don’t remember 2 questions.   Enter box 1 at least for the RMD required.  

[dan_in_MI]

I will attempt to follow your advice.

1)I have entered the values from the 1099r. The gross distribution in box 1 is NNNN

2)I have distributions other than RMD. So I check the box "Part of this distribution was an RMD"

3)Following your advice, when I get to the question: "Enter below how much of NNNN received applies to the RMD?"  I enter the box 1 value NNNN. 

TT will not let me go forward. It is unwilling to let me take the whole amount if I say it is only partial RMD.

What do I do next?

[dan_in_MI]

I have called Turbo Tax and interacted on this community with Turbo Tax for several hours and have found no one who is able to either give a legal way to resolve this issue, or admit there is a flaw in the software. They apparently have no intention of fixing the software.

So this is my solution that will definitely not work for all situations.

1)The IRS says you must calculate the RMD for each IRA account. So the required RMD for that account is being put in as the required RMD, calculated as the total account value Dec 31, 2024 divided by the unified life expectancy. This has to be this way because the IRS gets your account balance in form 5498 for each account, and they know your age so they will compute it and it needs to balance.

2)The IRS says you can take the distribution to meet the RMD requirement from any of your IRAa and it is aggregated and should meet your requirement from #1 above. Therefore when TT asks what part of your distribution you have taken to meet the RMD, the IRS will let you take credit for distributions from any account. So as long as your total distributions from all accounts meets the total RMD requirement, put in the same number as the requirement. It may be paid from another account but that is OK.  It is as the IRS intends, so I can sign this return in good conscience.

If TT does not fix this issue, I will not be using it next year. 

[Commentsrarely]

Has anyone told you that they won't fix it? Apparently there is a guarantee that the results are 100% correct.

So I imagine a fix will be appearing soon, I hope so because I am having the same problem

[dan_in_MI]

Dear  MinhT1, Employee Tax Expert

I assume you are an employee at TT, perhaps you can help us.

Your response is what the IRS says, but it does not tell us how to fill in the boxes in Turbo Tax. Please give guidance.

You say the RMD must be calculated for each account. So is it correct to say that the required RMD is for only the one specific account?  This makes sense.

For the portion of the distribution that applies to the RMD, you say it can come from any account. Are you stating that if we have a distribution in ANY account that covers this we should put it in here?  I think so, but please confirm.

So here is an issue with the above. If I have two IRAs, and take my full distribution for both from one account, this follows IRS rules. However, the one with no distribution will not be issued a 1099-r. The one with the distribution, following your rule, would have the RMD covered, and the excess would go just as a taxable distribution. Therefore the total RMD for both accounts would not be recorded. The IRS gets a Form 5498 for every account, and they will know what the total of the two accounts RMD is, which is vastly different from what the tax return will say. It is also true that if RMD on the first one has not been covered, the penalty will not be detected. I can manipulate this scenario in multiple ways to make Turbo Tax fail, but I will leave you with just the one.

Please indicate the correct way to do this that works in TT.

By the way, I don't think there is one. The software is broke.

Thank You!

[dan_in_MI]

I have not been told that it will not be fixed. I guess my frustration is showing.

I haven't found anyone out of several that can provide a solution that is credible, and none of them seem to understand the issue well enough to grasp that  it isn't working. I have asked if  they can put in a bug report or get it logged as a customer issue I have been told no. I asked if I could make a dummy return demonstrating the issue and send it to someone to review and was told no, that is not really possible.

I sincerely hope it gets fixed, but I am not optimistic that it will get fixed as a result of my calls. 

[pdtannen]

Thank you.  I am having the same problem.  In the past TT aggregated all the withdrawals, as per IRS regs.  But for some reason, they changed the program this year.

[alfa60]

I too have just discovered the same problem with my RMD calculations... multiple RMD's but withdrawals from each that are not exactly the individual RMD but that add up to the total required.  Yet Turbotax is calculating a penalty.  I've gone over each 1099R form three times along with the followup questons and can't find anything wrong.  Intuit, would you please provide a response to the issue?  Thank you.

[dan_in_MI]

If this is new to you then you have not yet given up. I don't think that TT monitors this message but I think the call in support are TT employees. If you have the energy I suggest calling the support number and asking them to work through the issue with you. The agents I have talked to are very patient and wanted to help. 

Even though they were not able to help me, eventually someone has to make it through to a person who has the tenure to know how to proceed on a problem that can't be solved.

Make sure you have lots of time when you call and muster all of the patience you have. I spent over two hours with them before they gave up. If you have success I would like to hear the results.

Thanks for the effort.

[BobatINT]

I found this exact problem as well. It appears what a person needs to do is to say the amount of RMD for each account is what got distributed. This eliminated the penalty, but I don't think if it got submitted to the IRS that it would get through their gates due to the RMD not matching each account. 

Does anyone have the support phone number to actually talk with someone? I can't find it.

THIS DEFINATELY NEEDS TO BE FIXED. 

[MarilynG1]

The IRS does not know what your total required RMD is, nor the amount of required RMD for each account.

As long as you have withdrawn your total Required RMD for the year, the workaround suggested by @BobatINT is acceptable to complete your tax return, or a permutation if you withdrew a lot more than your required RMD. 

If you remember, this is the first year that TurboTax asks what your RMD amount is; previously it only asked if you withdrew your required RMD, yes or no. Your Plan Administrator is tasked with making sure you withdraw your required RMD from your account. 

Here's more on What is RMD? and IRS Requirements for RMD's, which states "the owner can make withdrawals from the account(s) of their choice as long as the total equals or exceeds the total annual requirement."

How to Contact TurboTax Support.  

@dan_in_MI 

@BobatINT 

@alfa60 

[fanfare]

Since TurboTax 2024 does not support multiple 1099-Rs for multiple accounts,

do not enter your 1099-Rs but one.

In that one put box 1 = the "total distribution" from everywhere, and tell TurboTax the RMD was that amount, or less.

Check the "taxable amount not determined" to get proper treatment of basis, if any.

What counts is the final values on Form 1040 Line 4.

It makes no difference how you achieve that.

@dan_in_MI 

@VolvoGirl 

@MarylinG1

[dan_in_MI]

This is great. The last two suggestions make a lot of sense. I will summarize both of them here in one place, and then add what I did for TT phone support.

Both of these are suggested work-arounds for Turbo Tax not working for multiple 1099r. It would be better if TT would fix it, but otherwise:

1)Assuming you have taken distributions at least equal to your RMD, for each 1099r put in the calculated RMD where asked, and put in that same amount when asked how much you have taken as a distribution. At least one tax expert agrees this is OK. I think there may be multiple corner cases where this doesn't work. ie an IRA without a 1099r, or if the amount of RMD distribution you claim for one IRA exceeds the total distribution maybe TT will not accept, etc. I leave it to someone else to test the corner cases. If you have not paid enough in you will have to jockey the numbers.

2)Combine all your 1099r for one person into one composite 1099r. It seems like TT should give the correct result for this for all cases, since it seems to handle one 1099r. Even if something gets triggered on your return for a human review it would be cleared immediately if the totals line up.

I am still skeptical about how much the IRS knows about your RMD. They certainly do know your total RMD if they want to from the form 5498 filed by the administrator for every IRA. It has the total account value at the prior year end, and a check box whether you are required to take RMDs. The IRS does know your age, so it is remedial to compute the amount. I also am not too sure about the statement that the only thing that matters is form 1040 line 4, IRA distributions. For sure it this total matches the  sum of all 1099r, that is good. But an accurate form 5329 is also important and should be correct for RMD amount and distributions.

I also am not too sure about the account administrators being responsible to make sure you take your RMDs. I think they are required to inform you, but they cannot be help responsible for compliance because you may take your distribution from an IRA at a different company. Enforcement responsibilities belongs to the IRS. That is why RMD compliance and penalties is in your tax return.

TT phone support-

If you go in through your account using Turbo Tax a case number will be assigned even before you call. They can put the results of your case into your account so the call history is recorded.

Open Turbo tax>Help on top ribbon>Turbo Tax Help Center>Ask the bot your question

When you get the answer there will be a list of suggestions. Click the button "Get Even More Help".

State your question again, and select "Call Us"

A phone number is then supplied with a case number. When I called this way I got very good support and the history was in my account when I called back later.