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 In total I have withdrawn my full RMD but not the full RMD from one of my three IRAs.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

[MinhT1]

In your case, there is no penalty. You can answer in TurboTax that you have satisfied all RMD requirements.

An IRA owner must calculate the RMD separately for each IRA that he or she owns, but can withdraw the total amount from one or more of the IRAs.

Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts.

However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans have to be taken separately from each of those plan accounts.

[bdiamondmd]

The message was not responsive to my inquiry. TurboTax asks about each IRA individually and determines if a penalty is due based on the answers on each one. It does not add up all distributions and compare against total RMD, thus falsely calculating a penalty. 

[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 1099R for the RMD, not the total RMD for both.  Don't worry if they don't add up to the actual RMD for all.

[bdiamondmd]

I don’t want to get too specific, but the RMD for one of my IRAs was $3882. I withdrew $3000. The $882 deficit was part of the withdrawal from one of my other IRAs. TurboTax calculated a penalty of about $200. 

[peterholmes9]

I have this same problem. No matter how I enter the RMD related questions, TT generates the excess tax. I am working with support to resolve this, but have received no answer yet. This is definitely a bug,. On the excess tax form/worksheet, TT only reflects one of my two withdrawals (the one that is less than my RMD for that account).

[dan_in_MI]

Intuit,

You have not responded on this message. Please respond if you agree this is a Turbo Tax problem, and when a correction will come out.

I have the same issue. So I don't disclose my personal details I put in these test numbers.

IRA 1 has RMD of $11,000, distribution was $3,000, all applied to RMD;

IRA 2 has RMD of $20,000, distribution was $28,000, all applied to RMD;

Clearly the full RMD of $31,000 is paid. Even though I answer that question YES, I paid my full RMD, Form 5329 calculates an underpayment of $8000 and a tax (penalty) of $2000 from IRA 1, and ignores the over payment of $8000 on IRA 2.

Please do one of two things for me:

1)Agree that the behavior of TT is incorrect and provide a correction date or

2)Tell me what I should do to make it work.

If you can't reproduce this problem, please contact me for more information, because this is a real issue for me.

Thank You!

[VolvoGirl]

Did you try this?   When it asks about the RMD it is only asking for that one 1099R you are entering. You need to enter the amount from box 1 on that single 1099R for the RMD, not the total RMD for all and even if it is more than the total.

[John_Bissell]

Sure, that works but I don't believe it's the data that's being asked for. The program already has the 1099-Rs. I believe it wants the amount that each financial institution says is the RMD for that account. Putting those in as noted in a previous message causes the penalty to be calculated when there is no penalty required.

Intuit needs to just fix the problem rather than  having us submit a return using just the 1099-R info.

[VolvoGirl]

That’s the way it’s working this year.  For some reason they changed it.  We keep complaining about it.  Just enter the amount from box 1 for the RMD for each 1099R even if it’s too little or too much.   

[dan_in_MI]

Thank you for the reply. Your suggestion does not make sense.

Box 1 is the total distribution. This is not the RMD required for the account.

Box 1 includes ALL distributions, not just RMD:

-Distributions that would apply to the RMD, and are not put into a retirement account.

-Distributions that are above the RMD level and are not put into a retirement account

-Distributions for Roth Conversions

-Distributions that are moved to another IRA.

For example, if I take a distribution which is for RMD of $5,000, that will be put into box 1.

Then if I do a Roth Conversion of $50,000, that will also go into box 1.

Then if I move the remainder of say $200,000 to a new custodian, that will also go into box 1.

So in this case Box 1 is $255,000. equal to my entire IRA value. This is not the correct answer for the RMD required or the RMD distributed, or any other RMD related question.

Lets say I am 73 years old, my IRS lifetime is 26.5 years, and my RMD required is $255000/ 26.5 = $9623 for this account. I withdrew $5000 for RMD. all other distributions for this account went into something else. It makes no sense to put in $255,000 for the required RMD.

Following your advice from many posts:

- RMD required for this account is $9623

-RMD taken from this account is $5000

So for this account there is a $4623 shortfall. If this is my only IRA, I would owe a 25% penalty,

However, I am a savy taxpayer so I take $4623 as an RMD distribution from another traditional IRA. Now I have taken the full RMD value and there should be no penalty. However Turbo Tax STILL applies the penalty anyway.

Thank You again for the reply. Please let me know how to reconcile this.

[dan_in_MI]

It sounds like this complaint is not getting to the correct person at TT.

The IRS approved behavior that is not implemented correctly is this:

====================

Q5. Can an account owner just take a RMD from one account instead of separately from each account?

An IRA owner must calculate the RMD separately for each IRA they own but can withdraw the total amount from one or more of the IRAs.

=================================== From IRS web page below. Also is documented in

many IRS documents.

https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs

=====================

The actual behavior of Turbo Tax is to calculate the penalty for each account separately,  and add only penalties up, ignoring overages on other accounts. The correct behavior is to:

1)Calculate RMD requirement for each account and aggregate it into one number

2)Take that amount from any combination of accounts and amounts that equals or exceeds the requirementl

I think if this could get presented to the correct person they would be able to correct it. It is an obvious flaw.

[dan_in_MI]

Using the amount from box 1 will cause an even worse problem in my case. The errors will be multiples higher in other areas.

I really appreciate your help, but the proposed solution of using box 1 value does not work. I do understand that you are not able to elevate this in a way that gets it corrected.

Perhaps a customer request might get more attention. Is there a way that I can file a problem report or complaint? Or some way that I can elevate this issue? I really need it fixed.

Thank You!

[peterholmes9]

TT asks three RMD related questions: 1. the 1099 amount; 2. Is this a full RMD amt, a partial RMD amt; 3. the RMD amount (not necessarily in that order). I have tried all the options I can think of and keep getting the excess tax. As a user I don't know if TT wants the total RMD amount for all my IRA accounts, or the RMD amount for the account from which the withdrawal was made. I have tried all possible combinations and always receive the excess tax. If this isn't a bug, it should certainly be made more clear and have better help info. HELP!!

[VolvoGirl]

I would still enter the amount from box 1 for the RMD on each 1099R.   That shouldn’t affect any other areas.  That’s how you have to get around it.  But I’ll page someone who knows more, @dmertz