Retired with a 401k that gets an annual RMD. TurboTax asks if I get regular periodic payments from this retirement account.

[TaxableTurtle]

I searched TurboTax forum and found TWO posts that seems to match my question, with two CONTRADICTING answers from Level 15 users (possibly TurboTax employees?), so I would like to lay it all out here and find out this answer.

I'm 72 and retired with a 401k. I'm of the age where I'm getting an RMD every year. I have to call Fidelity to remind them to do it every year. It happens EVERY year, but NOT necessarily on the same exact DATE every year. Fidelity calculates the amount the RMD should be THEMSELVES to be in line with whatever the IRS wants, I don't choose it, and I DON'T think it's the EXACT same dollar amount either every year.

TurboTax asks me "ANY PERIODIC PAYMENTS? Did you receive payments from this retirement account on a regular basis, such as monthly, quarterly or annually?"

There are 2 choices:

"Yes, I got regular periodic payments from this retirement account"

"No, I didn't get regular periodic payments from this retirement account"

What do I do? It is not clear to anyone whether TurboTax is thinking of a SEPP, if I am personally doing a SEPP, or what TurboTax is thinking when they ask this question. 

Here is what the help file says to clarify the question:

"Periodic Payments

Funds that you receive at regular intervals (weekly, monthly, quarterly, annually) over a predetermined period of time, for example, 15 years, or for life.

Equal periodic payments are annual withdrawals that you make from a pension plan or 401(k) plan. The amount you withdraw is calculated so that the funds last throughout your expected lifetime."

Thank you for looking into this.

[VolvoGirl]

Answer yes you get regular payments.  You get it once a year.  That is Annually.

[macuser_22]

I have to disagree with VolvoGirl.   The periodic payments is for a pension that the periodic payment  is based on years of service as in a defined benefit plan, not a 401(k) where the distributions are voluntary, one time distributions ever if automatic based on RMD amounts.

That is not what is meant as "periodic payments" based on a retirement payment formula from a retirement pension unless it is a 401(k) that can pay an automatic amount for the rest of your live time (essentially a 401(k) that acts like a lifetime  retirement annuity.)

Answer NO.

[TaxableTurtle]

Replying to @VolvoGirl Thanks but are you sure? I ask because the same question was asked in another thread linked below and another Level 15 person (I assume a tax pro like yourself?) gave the opposite answer.

https://ttlc.intuit.com/community/retirement/discussion/rmd-amp-periodic-payments/00/600123

The fact the question is ambiguous and 2 pros are giving opposite answers gives me pause, sorry if it's a bother but hopefully you can see the predicament for me.

I just have a regular 401k RMD that I'm required to take every year by the IRS, it's not always the exact same amount (Fidelity does the calculation), and as far as I know I have to remind them to do it.

@dmertz 

[VolvoGirl]

Guess I was wrong.  Learn something every day.  I defer to the other answer.

[dmertz · Accepted solution]

macuser_22 is correct.  "Periodic payments" refers to distributions being received in the form of an annuity (a traditional pension, for example), where your distribution amounts and dates are all predetermined.  What you are receiving are nonperiodic distributions, even though some amounts are required to be distributed each year.  If you have the freedom to take out more than the RMD, it's nonperiodic, even if by choice you take the same amount out each time on a regular schedule.  The Simplified Method and General Rule are applicable only to periodic payments being received in the form of an annuity.

[VolvoGirl]

In Turbo Tax if it's all taxable will it matter if you answer either way?

[dmertz · Accepted solution]

Answering that it's a periodic payment when it's not causes TurboTax to go into the questions regarding the Simplified Method or the General Rule, neither of which apply to a nonperiodic payment, and those questions are confusing enough that many people provide inaccurate information and end up causing the taxable amount to be underreported, which the IRS Automated UnderReporter system catches and results in the taxpayer receiving CP 2000 and a tax bill.  The calculation using the Simplified Method or the entry for the General Rule overrides the taxable amount show in box 2a of the Form 1099-R.  The taxpayer then posts on this forum asking why "TurboTax" underreported their income.