Partial RMD withdrawal in 2020

[Grasscatcher]

I took a partial withdrawal of my RMD ( monthly withdrawal) for several months in 2020. Th plan administrator called and asked if I wanted to suspend further payments in 2020, I agreed. My 1099-R shows what I received. Should I answer "Yes-some or all of this withdrawal was an RMD" and enter the number on the 1099-R

[Bsch4477]

You can do that although technically it’s not a RMD since they were suspended for 2020. The important thing is that you report what you withdrew and didn’t roll over. 

[dmertz]

TurboTax only asks the question to determine how much was eligible for rollover.  If you didn't roll over any of these distributions, it doesn't matter how you answer this question.

[frenchy62]

I have the same situation where I took the first two of four RMD's for 2020.  My 1099R correctly shows the amount had taken out was a little less than half the amount I would have normally received.   Since I answered YES to "some or all of this withdrawal was an RMD", I'm not sure how to answer the following question:  (2)  Tell us how much of the (shows the partial RMD amount) that you received  applies to the RMD that needed to be taken out.  (A) All of this distribution was an RMD  or (B) Part of this distribution was an RMD.   

[dmertz]

frenchy62, you must delete and reenter the 1099-R, then answer that none of the distribution was RMD.  These distributions ceased to be RMDs when RMDs were waived by the CARES Act.  You were not required to take any RMD for 2020.

[AmyC]

None of this withdrawal was RMD because RMD was suspended for 2020. This eliminates the second question and you will be fine.

@frenchy62

[Tasteseekers]

I think some of the advice above does not clearly reflect how you should account for anything taken out of a retirement account under the RMD guidelines.  The requirement to take a distribution was suspended, but if you took one, you have to account for it.  I believe whatever that was withdrawn should be reported as income as a normal RMD, matching the amount shown on on the 1099-R and then, if you executed a rollover, returning all or part of it back to your IRA within the 60 day allowable limit for rollovers, you would report the rollover amount accordingly.

I'm using TurboTax desktop, but I presume the online version works the same way.  I took a distribution.  I fill out the information as it was received from my institution for the 1099-R entry.  IF I had returned all of it during the allowable rollover period, I would answer 'No' to the question of whether this was an RMD for 2020.  On the 1040 form it would show the amount of the distribution on line 4a and the taxable amount on 4b as $0, indicating a rollover took place. 

If I had NOT returned any of the distribution, I would answer 'Yes' to this question and select the choice that all of this distribution was an RMD.  The total amount of the distribution shows up on line 4b. 

I in fact did a partial rollover, so I answer 'Yes' to this question and select 'Part of this distribution was an RMD'.  I then fill in the difference between the amount I originally withdrew and the amount I returned in the prompt for how much applies to the RMD.  The 1040 then shows the total distribution on line 4a and the correct taxable amount on 4b.

Hopefully, this helps cover all the bases.

[macuser_22]

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@Tasteseekers wrote:

I think some of the advice above does not clearly reflect how you should account for anything taken out of a retirement account under the RMD guidelines.  The requirement to take a distribution was suspended, but if you took one, you have to account for it.  I believe whatever that was withdrawn should be reported as income as a normal RMD, matching the amount shown on on the 1099-R and then, if you executed a rollover, returning all or part of it back to your IRA within the 60 day allowable limit for rollovers, you would report the rollover amount accordingly.

I'm using TurboTax desktop, but I presume the online version works the same way.  I took a distribution.  I fill out the information as it was received from my institution for the 1099-R entry.  IF I had returned all of it during the allowable rollover period, I would answer 'No' to the question of whether this was an RMD for 2020.  On the 1040 form it would show the amount of the distribution on line 4a and the taxable amount on 4b as $0, indicating a rollover took place. 

If I had NOT returned any of the distribution, I would answer 'Yes' to this question and select the choice that all of this distribution was an RMD.  The total amount of the distribution shows up on line 4b. 

I in fact did a partial rollover, so I answer 'Yes' to this question and select 'Part of this distribution was an RMD'.  I then fill in the difference between the amount I originally withdrew and the amount I returned in the prompt for how much applies to the RMD.  The 1040 then shows the total distribution on line 4a and the correct taxable amount on 4b.

Hopefully, this helps cover all the bases.

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@Tasteseekers if you note the date on the above post it is February 2020, so the discussion is abut 2019 tax returns that had nothing to do with the 2021 rules for filing 2020 tax returns.

For 2020:

Delete the 1099-R you entered and re-enter.

Answer the RMD question that "None of this distribution was a RMD" or "RMD not required" depending on the TurboTax version - because it was NOT a RMD, there were no 2020 RMD's.

If this is an inherited IRA then answer the "Is this IRA inherited" with NO. The purpose of that question is to PREVENT rolling an inherited IRA over, but is allowed for 2020 only.

Then you will get the screen to say it was "moved" and all rolled over. Or if a part was rolled over choose a "combination for things" and enter the part rolled over in the top box.

Also check the box that this was NOT a COVID related distributions - it was a RMD that was returned.

That will put the 1099-R box 1 amount on the 1040 form line 4a with the word ROLLOVER next to it.

[stpetemiker]

Just another wrinkle and this stuff is driving me crazy as an older and long term Turbo Tax user.

So I took one RMD in 2020 before Gov. announcement of not necessary and with Fed taxes withheld as usual.

Then from another INSTITUTION took another "rmd"($20K) but did the rollover back to same account within a few weeks but they kept the Fed Taxes, which they insisted to forward to Uncle Sam.

Unfortunately both report funds taken and taxes paid on 1099 R with distribution code 7.  INSTITUTION says not their problem   ROLLOVER form sent to IRS in May will absolve me of probs ????  But their 1099 R shows it as taxable !!! And shows the $5K of Fed taxes taken by them.  Distribution code 7 

So I enter all my 2020 tax stuff now in April and I'm using TurboTax forms a lot as an experienced user of Turbo.

The only way I see to address this predicament of reporting phantom income is to use TurboTax form 1099R distribution code 8 and mark 1099 R as corrected (by me) gross bucks say $20,000.00 but zero net and I enter taxes paid of $5k.  Not really sure what distribution code 8 means but it seems to work.

I then entered a text worksheet for 1040 4b saying that there was a rollover to named INSTITUTION account and explaining what I did.  But the word ROLLOVER doesn't appear on my 1040 and it would be a partial rollover only.  My RMD total  net bucks reflects just the one real one taken early on and not the phantom money the INSTITUTION's 1099r would suggest.

My gross income totals and taxes seem correct.

The real question is, is there a way to do this correctly via forms....1099-r etc ????  The INSTITUTION is steadfast on not issuing another 1099r.

Do you think my way is acceptable to IRS.  I am going somewhat from memory since I do my work on another computer so  feel free to corroborate detail.

And is there way for me to type in a Partial Rollover text on TurboText 1040 ?  Thought we once did it.

Please respond soon so that I can sleep better.

thanks, Mike

[Critter-3]

Mike, Mike, Mike ... stop hitting your head against the wall.   Simply indicate NONE were  an RMD and then enter the amount rolled over when that questions comes up ... that is the correct way to handle this in the program for a 2020 return.  NONE of the distributions were considered RMDs in 2020 since they were not required.  

[Bsch4477]

Mike.  Go to step by step and delete any 1099-R you have worked on. Then start again reporting your 1099-R as it was issued. When you are asked if the withdrawal was RMD say NO. Then you will be asked about any returned to your account. Enter the amount of the withdrawal minus the tax withheld since you will get the benefit of the withheld tax. Now you will not be taxed on your withdrawal and any tax withheld will be applied to your tax liability. 

[stpetemiker]

Thank you I reworked it in your manner and it appears to be correct.  I will sleep like a baby.  You did a good job.

Mike  

@Tasteseekers if you note the date on the above post it is February 2020, so the discussion is abut 2019 tax returns that had nothing to do with the 2021 rules for filing 2020 tax returns.

For 2020:

Delete the 1099-R you entered and re-enter.

Answer the RMD question that "None of this distribution was a RMD" or "RMD not required" depending on the TurboTax version - because it was NOT a RMD, there were no 2020 RMD's.

If this is an inherited IRA then answer the "Is this IRA inherited" with NO. The purpose of that question is to PREVENT rolling an inherited IRA over, but is allowed for 2020 only.

Then you will get the screen to say it was "moved" and all rolled over. Or if a part was rolled over choose a "combination for things" and enter the part rolled over in the top box.

Also check the box that this was NOT a COVID related distributions - it was a RMD that was returned.

That will put the 1099-R box 1 amount on the 1040 form line 4a with the word ROLLOVER next to it.