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 In total I have withdrawn my full RMD but not the full RMD from one of my three IRAs.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

Hi  grifftax17

First of all, sorry for the long post.

As you have already surmised, there is no "acceptable" solution that works right now. Short answer- it has to be fixed by Turbo Tax.

Details,

Some of the proposed workarounds have merit for a subset of people, and some are just plain terrible.  I have distributions that are comprised of RMD, Roth Conversions, QCDs, and rollovers, and none of them work for me. I am going to file for an extension if the fix doesn't come in time for me.

Let me start by summarizing some of the  repeatedly offered solutions that don't work for me.

*** Answer the question YES for "Have you satisfied the RMD requirements?" I did this and TT still populates the important form 5329 incorrectly resulting in an undeserved penalty.

****Enter alternate values that force one of the pages to show the full RMD requirement correctly. Still, Bad 5329>penalty.

****Enter 1099r Box 1 value for either RMD required, or RMD taken, or both, or some combination. This can be manipulated to eliminate the penalty and form 5329, but it does not result in correct Total RMD requirement, proper Roth  Conversions, or valid required IRS forms. And it triggers TT review issues due to the mismatches in the forms that can't be fixed.

But I do have an answer to your question "What can we do?"

The short answer is that Turbo Tax has to fix it, and  <DawnC Employee Tax Expert>says "We are modifying the RMD section of TurboTax. ".  Look at the second post from this link, and you can sign up for notifications.

https://ttlc.intuit.com/community/retirement/discussion/re-i-have-multiple-iras-in-total-i-have-with...

It would also be helpful if you called Turbo Tax on your issue to get another ticket on this issue. I have copied the previously posted method that seems to work the best to contact them below.

Turbo Tax phone support with automatic case assignment-

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

Ignore the bot answer and scroll down to and click  "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. Be sure to ask your agent to elevate the issue once they agree it is broke. You may have to call back a couple times to get someone who understands the issue.

Note: my post was changed by TT because it had "invalid HTML", so I apologize if the links don't work.

[maechl]

When I entered my first 1099-r I was presented with a pop-up that told me not to file my return yet, that a fix was in the works for an RMD issue. (paraphrased)

If I don't get a fix by the last file date I will employ the workaround and use the warrantied promise if needed.

[grifftax17]

Ok thanks for the info.  I am now on your list for info on the update.  However, in my haste to finish my taxes, I have filed them with the penalties ($297).  Am I correct in assuming that once the update is complete, I can recalculate and file an amended return?  

[dan_in_MI]

AWESOME

[plpollack]

I am just another long-time TTax user.

I did an amend years ago - it was a pain in the you-know-what.

Just to caution other users - I would have instead, if they are in a hurry, to finagle the answers as others (me too) have indicated.

You are reporting all of your income that way (most important), and you are also reporting your total RMD as well, just not per account as TTax has requested.

[Commentsrarely]

You can amend your return, but it isn't quick since the first one has to have been processed before you can efile an amendment.  Amending isn't really hard but it is another TT thing you need to figure out. 

On the bright side the IRS may catch the error and just sed you a letter explaining their correction. After all they'll know that there is no penalty due and may have even have heard of the TT SNAFU.

It would be really bad if TT hasn't got this fixed by mid October.

[Ronkoc]

I am having the same issue, I have multiple IRA accounts In total I have met the MRD required. Turbo tax insists I owe a penalty. How do I correct this?

[DawnC]

Please sign up for notifications, @maechl and @Ronkoc, from the link below.   We are updating the RMD section to remove incorrect penalties.  

Why am I getting an RMD distribution amount error?

[dan_in_MI]

I would assume that the IRS has many returns they have had to correct already. You would hope after a few thousand of them they would send a nasty memo to TT.

[fanfare]

i doubt very much IRS is going to correct your return if your 5329 shows a penalty but that is because of a miscalculation by tax software.

Another solution not mentioned is to file with a penalty but request a waiver of the penalty.

A waiver request must be supported by a "reasonable" explanation.

Is it reasonable to explain that your return calls for a penalty but the software doesn't work right?

Perhaps you would have to explain further.

When you request a waiver, you don't pay the penalty up front.

@dan_in_MI 

[plpollack]

Curious - why wasn't this an issue last year?  Did the law change, or did TTax break something that worked?

[Commentsrarely]

Turbo Tax made a change from last year

[plpollack]

Are you saying it was done correctly and then they just un-did it?

Please a few more details.

Thanks.

[dan_in_MI]

As many posts have said. It worked last year, it does not this year. How, Why, and When you will have to talk to Turbo Tax.  It is pretty clear it is broken, since they have given multiple notices that the RMD section is being updated.

[plpollack]

Agree.

I was just hoping a real TTax person could give us insight on what the thinking was here.