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 In total I have withdrawn my full RMD but not the full RMD from one of my three IRAs.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

[Teacha214]

Hello @DanaB27! I can only do steps 1-4. The other steps dont show up and I did update TT software. 
should I start a whole new return and if I do will all the information that was put in start over fresh?

[Teacha214]

So do I. I can’t do any steps past step 4!

I purchased it from Costco. Is it considered desktop version?

[Teacha214]

I don’t have the ability to go past step 4 that DanaB27 states to do and I updated TT. Do I need to remove everything and start new?

[Teacha214]

Where do you go to see if a 5329 was generated?

[Teacha214]

Danab27

What happens if I updated the software of the desktop version purchased at Costco and I follow the steps but can only complete through step 4? There is no option for any steps past 4. Please help!

[Teacha214]

Danab27, in step 4 if I chose “the entire distribution was an RMD” but the distribution was more than the two RMD’s, is that ok to say? And if I say that, will the steps past step 4 show up for me to proceed with?

The process I did was state that “Only part of this distribution was a RMD” and I entered the amount of both the RMD’s but then could not get past step 4. Which should I choose: the “entire distribution” or “only part of the distribution“ in order to show that satisfied both RMD’s from the one

1099-R.  

[DanaB27]

To clarify, after you get answer step 4 you will have to continue through the interview until you get back to the  "Your 1099-R Entries" screen. Here you click "Continue" and then you continue until you see step 6.

You stated you updated TurboTax Desktop, correct?

Yes, you it would be ok to say that the entire distribution was RMD. When you took all of your RMD for 2024 then Form 5329 doesn't have to be filed. You can switch to Forms Mode and search for Form 5329 to see the Smart Worksheet on Form 5329 but it doesn't get sent to the IRS if you took all of your your RMD for 2024.

@Teacha214 

[Rarichman2244]

I have 2 accounts.  One from an annuity. The annuity pays more than the RMD for that account. So I take less than the full in the other IRA, the total being over the minimum for the total of both.  On the 1099 R form, enter the actual required amount for that account, then enter the distribution taken. Do that in each account regardless of whether over-or under.  Make sure you check the entire gross applies to the 2024 RMD.  THEN IF YOU CLICK THE QUICK ZOOM TO FORM  5329, it will show you’ve paid the appropriate total RM d, and no penalty. Make sure you don’t combine different individual’s RMDs, like a spouse as that is not allowed.  Try it and get back to us.

[Teacha214]

DanaB27

when I finished through step 4 and returned to the 1099-R entries page and clicked continue the questions I am asked are:

did you take any disaster distributions in any prior year… and I click no. Then I click the continue button And I am asked “any no deductible contributions to your IRA?" I click no and then click the continue button. 
Then it asks me if I ”received social security or railroad retirement benefits in 2024” and I click yes. 

i click continue and it asks me” tell us about the benefits you received” I clicked the soc sec box and clicked continue. Then I completed the ss boxes information and clicked continue. The next slide asks if I am living abroad in any countries I clicked no. The next slide asks if I received any lump sum payments I clicked no and then continue. The next slide asks about Canadian retirement plans and fund I clicked no and then  Continue. Then I am taken back to the “your 2024 income salary slide. 
I am not asked any questions as stated above in steps 5 and on. 

When I clicked the 5329 form to view it, it shows the RMD amount for the 1099-R and the total RMD for both accounts. 
Why don’t I have the slides and questions you are stating and how do I know if it was done correctly then?

Is there someone I can talk to at TT to help me with this? What number do I call? How do I proceed, this is becoming very frustrating. 

I updated the desktop TT by clicking on my saved return. It said it was updating and it would take three minutes. It was dated 2-19. I did that yesterday and again there was another update today dated 2-27.

Am I supposed to manually update using the link you sent me and if I do that should I delete my past saved return and start all over again?

OR should I not manually update anything, just delete my past saved return and start all over again?

Who can I speak to about this?

How do I know when I look at form 5329T if I am going to be charged a penalty or not? Where would it state that on the form?

Whether I input that the RMD was only part of the distribution or the entire distribution was an RMD I still cannot get past step 4. There are no other steps for me per your directions. I do not get "did  you miss a required distribution from any retirement accounts",  or "total RMD for all other IRA's" screen.

Thank you!

[bflobob]

I thought I was doing something wrong but now I’ve learned that TT definitely has a flaw as I have the same issue as described above. I have 3 IRAs and I withdrew less than specified for the first 2 and made up the deficit in the RMD of the 3rd IRA so the total is correct but TT doesn’t want to let me proceed. I’ve read many of the responses and this definitely is a program bug that many have described. 
I will try to reach support tomorrow and I will also call Fidelity to notify them of the problem 

as they provided the program to customers this year.

[plpollack]

I'm just another user on TTax Deluxe desktop.  This has now been fixed from my own experience.

[VolvoGirl]

The 1099R RMD questions were fixed on Feb 20, 2025!  If you are using the Desktop program be sure to update your program.  Go back though and revisit your 1099R entries.

You need to go back through the 1099R entries and revisit all the answers.  The questions have changed so your prior answers won’t be right especially if you answered them with a work around to make them come out right.  I would delete that 1099R and enter it again manually.  That usually fixes it and resets the questions.

[DanaB27]

It seems you have the latest update. No, generally when you update then you do not have delete and start over again. But it might be a good idea to use VolvoGirl's suggestion to delete and reenter Form 1099-R. 

If you had a penalty you would see it on Form 5329 line 55.

@Teacha214 

[bflobob]

Thanks to all that answered. I am using the online version. I did delete all IRA account RMD imports as per one suggestion and started over again. This worked to handle the multiple RMD's' adding to the correct total and I was able to proceed. 

Then a new obstacle occurred. When I got to filing my return, I got a message to check the State tax paid on each of several Fidelity RMD's, form 1099-R.  The error message said, "check box 14b, State Tax Paid".  The added text stated". State tax paid cannot be greater than the RMD. " The first observation is there is no box 14b. Secondly, the amount referenced is in box 14, and State tax paid was, $62 and change and the RMD was $1400+.  I got the same error message for each of several Fidelity RMD's. All this data was previously deleted and imported a second time from Fidelity .  So now I'm stuck at the final step to file. I confirmed the info is correct, but the program keeps stating there's an issue. I'm so frustrated with Turbo Tax this year. I've used the disk version for years without any issues but this year it's been total frustration with the online version. 

[Fiberglass72]

DanaB27,

Thanks for the help you have provided with this difficult subject!

TurboTax multi-IRA distribution seems to work for a fairly simple case, but that’s not what I have. 

Here’s my case (using imaginary figures), and I NEED HELP to find a way to make TurboTax to work:

• I have three IRAs.  Let’s call them IRA-a, IRA-b, and IRA-c
• IRA-c was funded mid-year by a transfer of funds from IRA-b to IRA-c
  • That means IRA-c has no RMD (because it’s value was zero on 12/31/24
• Overall 2024 RMD requirement:  $30,000 (set by the IRA values on 12/31/2023)
  • RMD for IRA-a:  $20,000
  • RMD for IRA-b:  $10,000
  • RMD for IRA-c:   $0 (because it’s value was zero on 12/31/24)
• Total DISTRIBUTIONS taken in 2024 and shown on the 1099Rs:  $60,000
  • 1099R for IRA-a: $35,000 distribution
    • $30,000 of the distribution was via QDCs for IRA-a
    • I took an extra $5,000 in the distribution to cover a RMD shortfall from 2023
  • No 1099R sent for IRA-b because I did not take any distribution from that IRA
  • 1099R for IRA-c:  $25,000 distribution
    • I chose to take a $10,000 distribution from IRA-c to cover the remaining part of my overall RMD not covered by QCDs
    • $15,000 distribution for a Roth conversion

The desired state (I think) on Form 5329 “Part IX Additional Tax of Excess Accumulation Smart Worksheet”:

RMD for Account:           Distributions:                  Undistributed RMD

From Form(s) 1099-R     $20,000                             $30,000                             $5,000

Additional (enter):          $10,000                                                                        $25,000

Total:                                 $30,000                             $60,000                            

I followed your very clear example in this way:

• For IRA-a: 
  • “Required Minimum Distribution” screen:  $20,000
  •  Marked “The entire distribution applied to the RMD”
  • Marked “part of this distribution transferred to charity”
  • QCD screen:  $30,000
  • “How much of this Distribution Applied” screen:  entire amount
• For IRA-b: No 1099R so no entry and no place to make an entry
• For IRA-c: 
  • “Required Minimum Distribution” screen:  $0
  •  QCD screen:  None
  • “What did you do with the Money” screen:  marked “combination of rolling over, converting, or cashing out the money”
  • “Amount converted to a Roth IRA account”:  $15,000
  • “How much of this Distribution Applied” screen:  entire amount

What the 5329 Smart Work shows:

RMD for Account:           Distributions:                  Undistributed RMD

From Form(s) 1099-R     $20,000                             $35,000                             $0

Additional (enter):          $25,000                                                                        $25,000

Total:                                 $45,000                             $35,000                             $10,000

I realize that this example sounds like the examples the IRS uses in their instructions (cram every possible scenario into one example).  But, that is really the case I have.  I sure wish I had not done it this way, because I had no idea of the tax reporting chaos I was inflicting on myself.  I won’t do it this this in the future!

PLEASE, share you expertise with me so I can file my taxes.  I am willing to use the TurboTax interview method or put the information directly into the IRS forms via the forms method.  I just need the knowledge of how to proceed.

Thank you!!