Paid back a "required minimum distribution"
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davidharold12
Level 1

Paid back a "required minimum distribution"

How do I enter the following situation into Turbo Tax?

 

If you paid back a "required minimum distribution" from an IRA last year, you still have to report the payout on your 2020 tax return.

 

Did you return a 2020 required minimum distribution (RMD) from an IRA after learning that RMDs were waived last year? If so, you need to know how to report it on your 2020 tax return – but it's a tad tricky.

RMDs from IRAs, 401(k)s and certain other retirement accounts were suspended for 2020. But some people took out an RMD in early 2020 before the waiver was enacted in late March. Those people had until the later of August 31, 2020, or 60 days after the payout to put the money back into the account and treat the distribution and subsequent redeposit as a tax-free rollover.

If you took an RMD from an IRA last year and then paid it back in time, the Form 1099-R you get this year from your IRA custodian will show the original payout – but it won't account for the later return of the funds. In other words, the tax-free rollover won't show up on the form.

 

Don't worry, though. The 1099-R is not wrong. Rollovers are generally not reflected on the 1099-R because custodians know only about the distributions. They're generally not aware of a future rollover.

 

When filling out your Form 1040 or Form 1040-SR for the 2020 tax year, you should include the total amount of IRA distributions shown on your Form 1099-R on Line 4a of the 1040 form. Then you subtract the amount that you properly and timely returned to the IRA and report the remainder – even if $0 – on Line 4b of the 1040. Write "Rollover" next to line 4b so the IRS knows why the numbers don't match.

 

 

4 Replies
MinhT1
Expert Alumni

Paid back a "required minimum distribution"

The RMD that you repaid is considered as a rollover to the same account and is not taxable.

 

Enter your form 1099-R normally. After entering your form 1099-R, click Continue until you reach the screen Did [name] repay any of this distribution?. Check the radio button which corresponds to your situation then click Continue and follow the interview. Enter the amount repaid as a rollover and it will be excluded from taxation.

 

You will still have the credit for taxes withheld shown on your form 1099-R.

 

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davidharold12
Level 1

Paid back a "required minimum distribution"

I just tried your response to my question, but the screen "Did (name) repay any of this distribution?" never came up.  Today, I down loaded the latest Turbo Tax updates so the system is up to date.  Thanks again for trying to help.  Maybe I'll be doing my taxes manually this year.

RocketJSquirrel
Level 6

Paid back a "required minimum distribution"


@davidharold12 wrote:

I just tried your response to my question, but the screen "Did (name) repay any of this distribution?" never came up.  Today, I down loaded the latest Turbo Tax updates so the system is up to date.  Thanks again for trying to help.  Maybe I'll be doing my taxes manually this year.


The question I see in TT for Windows is different: "What did you do with the money from <this payer>?"

 

@davidharold12, is yours an inherited IRA? If so, you have to tell TT that it is NOT inherited. Then it will not skip over this question. I just encountered the same thing and this is the workaround.

davidharold12
Level 1

Paid back a "required minimum distribution"

No, my IRA is not inherited and I told Turbo Tax that.

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