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 In total I have withdrawn my full RMD but not the full RMD from one of my three IRAs.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

[VolvoGirl]

@bflobob  For state withholding in box 14,  If box 14 for state withholding is empty then leave all boxes 14-16 Blank.

If box 14 has an amount and box 16 is blank put in the amount from box 2a in box 16.  If 2a is blank then put in the amount from box 1.

[tmmill]

I agree this is very frustrating!  I can not get mine to work without several thousands in penalties.  I following every solution listed and the only thing that works for me is by putting zero in the RMD box. 

[DanaB27]

If you met all your RMD for 2024 then you are not required to file Form 5329. TurboTax will enter the RMD information in the "Additional Retirement Account Smart Worksheet" to check that you met the RMD but this will not be sent to the IRS. Therefore, as long as you know you met your RMD for 2024 and you do not show a penalty on Form 5329, it will be fine.

Please see Can an account owner just take a RMD from one account for additional information.

@tmmill 

[Fiberglass72]

DanaB27,

Thank you for your response!  After carefully reading the IRS instructions for Form 1040, I can now see that TurboTax entered the correct numbers on line 4a and 4b for the 1099Rs, which is great!!

That said, it appears there is still a data problem with TurboTax.  Here is the Form 5329 “Smart Worksheet” generated from the example data at the bottom of my post:

                                       RMD for Accounts:           Distributions:                  Undistributed RMD

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

Additional (enter):             $18,500                                                                   $18,500

Total:                                     $38,500                            $35,000                          $3,500

It looks like TurboTax only included the $35,000 from IRA-a, but did NOT include the $25,000 distribution from IRA-c.  Maybe that was because there no RMD required from IRA-c? 

Shouldn’t the “Distributions” column on the Form 5329 worksheet show the total distribution of $60,000 (vs. the $35,000 that it shows)?  That shows a $3,500 shortfall between my RMD and the total distribution, and that causes an extra $350 in tax (shown on Form 5329 Line 54a), which then flows through to Form 1040 Line 23.

Is there a way for me to fix this in the Forms method?  Or have I entered something incorrectly?

As a side note:  Line 44 on the “1099 Summary” appears to be incorrect.  It only shows the $20,000 RMD from IRA-a but not the “Additional” $18,500 RMD from IRA-b (where I didn’t take a distribution; so there wasn’t a Form 1099R created).

I look forward to your advice!

Here is the example data:

• For IRA-a:
• “Required Minimum Distribution” screen:  $20,000
• Total distribution taken (box 1 on 1099R):  $35,000
• 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:
• RMD:  $18,500
• Distribution taken:  $0 (from this IRA)
• No 1099R so no entry and no place to make an entry
• For IRA-c: 
• “Required Minimum Distribution” screen:  $0
• Total distribution taken (box 1 on 1099R):  $25,000
• $10,000 for RMD
• $15,000 for conversion to Roth
•  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

[DanaB27]

Yes, I confirmed when you enter $0 RMD for IRA-c  that you do not get the "How much of This Distribution Applied to your December 31, 2024 RMD" screen. Since you withdrew more than the total RMD you could enter $1 on the "Required Minimum Distribution" screen to trigger the next question.

You are not required to file Form 5329 since you met all of your RMD for 2024. TurboTax will enter the information in the "Additional Retirement Account Smart Worksheet" to check that you met the RMD but this will not be sent to the IRS.

If you want you can go into the 1099-R IRA-c in Form mode and edit the RMD on line A in the "RMD Excess Accumulation Worksheet" to $0 to show the correct RMD on the  "Additional Retirement Account Smart Worksheet". But it isn't necessary, the worksheet isn't sent to the IRS since you met the RMD for 2024.

@Fiberglass72 

[Fiberglass72]

That fixed the problem!!

Thank you, thank you, THANK YOU!!

I appreciate your time and you expertise.

[klbonzo]

Volvo Girl - This has not worked on my downloaded desktop version. Note that I did not start on taxes until today March 24 and didn't download until today so it should be the most recent version. I've quit and restarted, and it tells me I am up to date. Note that this is on a Mac. Don't know if all the other positive responses are from Mac or PC. But I clearly have the same issues that have been stated by many others. I have deleted form 5329 and gone back through all the questions, but it still generates a 5329 with a penalty.

What do I do next?

[klbonzo]

Dana

This has not worked on my downloaded desktop version. Note that I did not start on taxes until today March 24 and didn't download until today so it should be the most recent version. I've quit and restarted, and it tells me I am up to date. Note that this is on a Mac. Don't know if all the other positive responses are from Mac or PC. But I clearly have the same issues that have been stated by many others. I have deleted form 5329 and gone back through all the questions, but it still generates a 5329 with a penalty.

What do I do next?

[AnnetteB6]

In order to take a closer look at your situation and try to offer a solution, you can consider sharing a diagnostic copy of your tax data file.  The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  

If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using and what states you are filing in a follow-up thread.  

If you are using a CD/downloaded version of TurboTax on a Mac, use these steps:

• Go to the menu at the top of the screen, select Help.
• Select Send Tax File to Agent.
• Post the token number here.

@klbonzo 

[klbonzo]

Thanks Annette

Token number 56618652-21419270

Turbotax 2024

Not clear if there is a version number but did find this info if it means anything

FPS version 4.6.9

Application 2024.r23.034

Build Date  Mar 19, 2025 at 5:03:05 AM

Running on MacOS Sonoma 14.3.1

[klbonzo]

Annette

The posting keeps modifiying the token number. It thinks it's a phone number and removes it.

Here it is with an asterisk in front and behind. Will see if that works

*[phone number removed]9270*

[klbonzo]

Okay the asterisk didn't work

Try it another way

566 a 186 a 52 - 214 a192 a 70

Disregard all the letter "a"'s

I see now that my original reply is now showing the token number. The algorithm must have figured out it's not a phone number

[AnnetteB6]

Thank you for sharing your token number.  After taking a closer look at your data file, I can see that the two Form 1099-R distributions with an RMD requirement are both inherited accounts from the same person.  This means that in order to prevent a penalty from being imposed that you may need to make an adjustment to the RMD amounts entered for each account.  

Instead of entering the actual calculated RMD for each one, enter the distribution amount in the RMD field instead.  You have met the cumulative RMD between the two distributions and should not incur a penalty.  

The following information from a Learn More link on the page where the RMD is entered may explain the situation more clearly:

Special Required Minimum Distribution Rules for Inherited IRAs

If you have more than one IRA, you can usually take money out of any of them to meet the minimum amount you have to take out each year. But this does not work if the IRAs were inherited from someone who died.

If you inherited an IRA from someone, you have to take the minimum amount out of that exact IRA. For example, you cannot take money out of your own IRA to meet the minimum for an inherited IRA.

The only time you can use one inherited IRA to meet the minimum for another is if they were both inherited from the same person. 

For example, if you inherited two IRAs from your mother, you can take the total minimum amount required from just one of her IRAs.

If you do take the minimum amount from just one inherited IRA, you may have to adjust how much you report taking from each. 

Using the example, if each IRA required $20,000 but you took $30,000 from one and $10,000 from the other, you would report $30,000 and $10,000, respectively, as the RMD for each account.

The total RMD you report for all IRAs inherited from the same person must match the actual total, even if the amounts from specific accounts vary.

Note that this cannot be done with inherited IRAs from a different person. So, for example, if you also inherited an IRA from your father, you could not use distributions from that IRA to satisfy the RMD of the inherited accounts from your mother.

@klbonzo 

[dzormelo]

I had a similar problem. I entered the amount from Box 1 which is the full amount of the distribution I took for that year (this includes the RMD).  The question that TT asks with regards to the RMD specifies that if you took it out by April 1st, you do not need to enter the amount of the RMD.  I think what it is doing if you enter the amount, is to calculate the penalty and tax on it.  

When I entered zero - it removed the penalty and tax it had created for the amount of the RMD.

If you withdrew your RMD within the time period allowed - do not enter an amount on the question about RMD's.