turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Inherited Roth IRA - can distributions be made retroactively?

I have an Inherited Roth IRA, inherited from my mother who passed away 6+ years ago. For the first 5 years of owning this IRA, I took the required minimum distribution. Then, in year #6 (2018), I was told by a financial adviser that after 5 years, distributions are not taxable, so there was no need to take one, so I didn't. Now, early in 2019, I came across info on the internet that while the distributions were no longer taxable, they are still required to be taken; otherwise there is a 50% penalty. With this conflicting info, it is difficult for me to understand the rules and whether I have made an error.

Does anyone know if the distribution was required? If so, is there any way I can retroactively take my 2018 distribution in 2019? Or if not, is there anything I should enter in TurboTax to indicate it?  Thank you.

1 Best answer

Accepted Solutions
dmertz
Level 15

Inherited Roth IRA - can distributions be made retroactively?

While the distribution is not taxable, Roth IRAs inherited by a non-spouse beneficiary are always subject to either annual RMDs based on life-expectancy or to complete distribution by the end of the 5th year following the year of the Roth IRA owner's death under the 5-year rule.

Since you are taking beneficiary RMDs based on your life-expectancy in the year following the year of your mother's death, reduced by 1 for each subsequent year, you need to make the late 2018 RMD and then file 2018 Form 5329 Part IX requesting waiver of the 50% excess accumulation penalty.  The distribution itself will be reportable on your 2019 tax return along with your 2019 RMD from this account.

If you have no 2018 Forms 1099-R that would cause 2018 TurboTax to ask if you received all of your RMD for 2018, since you appear to be using the CD/download version of TurboTax you'll find it easiest to prepare Form 5329 Part IX in Forms mode:

  • Enter on line 52 the total amount of RMDs you were required to take for 2018.
  • Enter on line 53 the amount you actually took ($0 if you had no other RMDs),
  • Enter on line A of the Waiver of Tax Smart Worksheet the amount that you received late and on which you are requesting a waiver of the penalty (the difference between lines 52 and 53).
  • Finally, click the Explain button and provide an explanation of reasonable cause for taking the RMD late (financial advisor provided incorrect information regarding the requirement to take an RMD).
  • TurboTax will complete lines 54 and 55.

Immediately prior to filing, double-check the printed Form 5329 to make sure that TurboTax has not removed these entries.  (Under some conditions TurboTax will remove these entries if you click the Continue button on the Your 1099-R Entries page anytime after making these entries in forms mode.)

View solution in original post

4 Replies
dmertz
Level 15

Inherited Roth IRA - can distributions be made retroactively?

While the distribution is not taxable, Roth IRAs inherited by a non-spouse beneficiary are always subject to either annual RMDs based on life-expectancy or to complete distribution by the end of the 5th year following the year of the Roth IRA owner's death under the 5-year rule.

Since you are taking beneficiary RMDs based on your life-expectancy in the year following the year of your mother's death, reduced by 1 for each subsequent year, you need to make the late 2018 RMD and then file 2018 Form 5329 Part IX requesting waiver of the 50% excess accumulation penalty.  The distribution itself will be reportable on your 2019 tax return along with your 2019 RMD from this account.

If you have no 2018 Forms 1099-R that would cause 2018 TurboTax to ask if you received all of your RMD for 2018, since you appear to be using the CD/download version of TurboTax you'll find it easiest to prepare Form 5329 Part IX in Forms mode:

  • Enter on line 52 the total amount of RMDs you were required to take for 2018.
  • Enter on line 53 the amount you actually took ($0 if you had no other RMDs),
  • Enter on line A of the Waiver of Tax Smart Worksheet the amount that you received late and on which you are requesting a waiver of the penalty (the difference between lines 52 and 53).
  • Finally, click the Explain button and provide an explanation of reasonable cause for taking the RMD late (financial advisor provided incorrect information regarding the requirement to take an RMD).
  • TurboTax will complete lines 54 and 55.

Immediately prior to filing, double-check the printed Form 5329 to make sure that TurboTax has not removed these entries.  (Under some conditions TurboTax will remove these entries if you click the Continue button on the Your 1099-R Entries page anytime after making these entries in forms mode.)

Inherited Roth IRA - can distributions be made retroactively?

Wow, thank you very much. I actually have e-filed my 2018 tax return (via the TurboTax CD version). Do you know if I can use TurboTax to amend my tax return including Form 5329? (I just tried, but could not find any way to initiate a Form 5329 in the TurboTax Amended Return screens.)  Or do I need to file an amendment with paper & pen?  Thank you!
dmertz
Level 15

Inherited Roth IRA - can distributions be made retroactively?

Since you've already filed, I would file the 2018 Form 5329 stand-alone along with your explanation statement.  You can just use the fillable Form 5329 that you can download from the IRS website:

Form 5329:  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f5329.pdf">https://www.irs.gov/pub/irs-pdf/f5329.pdf</a>
Instructions:  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i5329.pdf">https://www.irs.gov/pub/irs-pdf/i5329.pdf</a>

See Waiver of tax on the last page of the Instructions.

Inherited Roth IRA - can distributions be made retroactively?

Again, thank you very much!
Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
message box icon

Ready to start your taxes?

Hand off your taxes, get expert help, or do it yourself.

See Pricing

Related Content

Manage cookies