I rolled my RMD back into my Inherited IRA in 2020 per the CARES act. I received a 1099-R for the RMD withdrawal and a 5498 for the rollover. How to report in TurboTax?

[sdavgord26]

The Inherited IRA RMD was originally withdrawn in 2020, and fed tax was withheld.   The rollover back was for the entire amount originally withdrawn.

[dmertz]

Because RMDs were waived for 2020, this distribution was not an RMD even if that was the original intent.  Enter the 1099-R from TurboTax.  In the follow-up questions, indicate that none of the distribution was RMD, indicate that you moved the money to another retirement account or returned it to the same account, then indicate the amount rolled over.  TurboTax will exclude the amount rolled over from the taxable amount on Form 1040 line 4b and will include the word ROLLOVER next to the line.

If you previously entered the Form 1099-R and indicated that any part of the distribution was RMD, delete the 1099-R form from TurboTax and reenter it as described above.

[sdavgord26]

Thank you. However, I entered the 1099-R as you described, indicating that it was not an RMD, but nowhere was I able to tell it that I had rolled back the distribution amount. 

[dmertz]

sdavgord26, delete and reenter the Form 1099-R.

[sdavgord26]

Thank you again, dmertz.  Actually, the distribution code in box 7 is "4" ("death," because this is an inherited IRA).  So I did delete and re-enter the 1099-R, but still no place to describe the rollover return.  Could this be a TurboTax bug?

[dmertz]

[Edit]  It works fine in the CD/download version of TurboTax but I tested just now with the online version of TurboTax and it doesn't work.  The only workaround that I can come up with is to say that the IRA was inherited from your spouse and that you did not put the money into your own IRA.  This will allow online TurboTax to present the necessary question but will not affect your tax return in any other way.

[dmertz]

I've edited my previous reply after discovering that this is a bug only in the online version of TurboTax.

@Katie_B , here is another problem only in the online version of TurboTax that can only be experienced by stepping through step-by-step mode, in this case entering a code 4 Form 1099-R to report a rollover of a distribution received by a non-spouse beneficiary (a special situation for 2020 due to IRS Notice 2020-51).

[sdavgord26]

Thank you, again, dmertz.  It appears that the bug is the page immediately following the 1099-R entry pages, where it asks if there any of a list of "uncommon situations apply."  When I put a check in the box for "I inherited the IRA," then I do not get the page that asks about the moving it to another IRA or returned to same. But if instead, I select "none of these apply," then I get tot he page which you describe.  So I will use that setting.  Thank you again for all your help, now that I see it as you said. 

[dmertz]

You found a better workaround than I did.

[sdavgord26]

dmertz -- BTW, will this bug be reported, and will I know when it gets fixed?

[dmertz]

I've notified the administrator of this forum.  I would just use the workaround and not worry about when it will be fixed.  Using the workaround that you found will produce a tax return that is identical to what you would get if this problem did not exist.

[Katie_B]

@dmertz and all- this is currently being investigated by our team and I will give you updates as I receive them.

When I was playing around with my own file, I unchecked the box for IRA, continued to the rollover questions and completed them, then re-checked the IRA/inherited boxes. It did appear on my test file to still have the rollover in place, but definitely double check that on your own files if you try to use it as a workaround. 

Otherwise I will keep you all posted with this, thanks!

[Katie_B]

Hello all, I did hear back from the team about this. It has been determined to not be a bug due to this IRS publication, which describes that non-spouse beneficiaries are not permitted to rollover the IRA.:  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary#:~:text...

[sdavgord26]

Although that is true generally, year 2020 was a special case, due to the CARES Act.  RMD from IRA's, including inherited IRA's, were changed to 0 required.  And if one had already taken an RMD out for 2020, it could be rolled back in, including for inherited IRA's before 8/31/2020.

IRS announces rollover relief for required minimum distributions from retirement accounts that were ...

[dmertz]

As sdavgord24 said, this needs to be permitted in 2020 TurboTax due to IRS Notice 2020-51 permitting non-spouse beneficiaries to have rolled back to the distributing account by August 31, 2020 amounts that would have been RMDs were it not for the CARES Act waiving RMDs for 2020.  In any other year the "not a bug" response would have been correct, but not 2020.