RMDs from an inherited Roth IRA are not taxable. Can you explain how to resolve this in Turbo Tax?

[Opus 17]

What codes are in box 7 of the 1099-R?

[charliekinger]

Q

[charliekinger]

Q=--Qualified distribution from a Roth IRA.

[Opus 17]

I'm not clear on what you are being asked.  Are you actually being taxed?  Any 1099-R with Q should not be taxed.  

 Or are you having difficulty with the RMD question?  As I recall, inherited Roth IRAs do not actually have an RMD.  The statute language is confusing to lay people, basically, all inherited IRAs have an RMD requirement after 2022 if the original owner had an RMD requirement.  But since Roth IRAs do not have an RMD, neither do inherited Roth IRAs.  If you are being asked about an RMD, just say it was zero; or say it was equal to the amount you withdrew.  You should not be paying a penalty or filling out form 5329 for an inherited Roth IRA.

@dmertz 

[charliekinger]

Thank you for the well thought out response.  I agree with the information you provided and appreciate the additional detail (which I did not know).  From what you stated, we appear to be in agreement.  The issue is that the Turbo Tax software is not allowing me to file due to a perceived error,  I have tried entering 0 in block 2a and that did not process.  During the "Final Review" the software is detecting an error and is requiring me to enter RMD amount, which increases the tax.  This is occurring during all the review processes.  Since there does not appear to be a solution, I think my only option is to file without including that 1099-R.  I hold out the possibility that I may be missing a button or a step, or perhaps need an additional form, but there does not appear to be an immediate solution via the current Turbo Tax software options provided.

[Opus 17]

Adding an RMD should not increase your tax unless it is also generating a penalty.   If you are using the software on your own computer you can switch to Forms mode and look for errors (highlighted with red !!!) but you can't do that with Turbotax online.  If using online, you can call tech support, they can look at the internals of your file.  But you might need to apply for an extension today so you have more time to get through tech support. 

One thought would be to delete the 1099-R then enter it again.  Enter it manually this time if you previously imported it.  Trying answering that there is no RMD requirement.

You might also try deleting the 1099-R and enter it again using code 4Q for box 7 instead of Q.  "4" indicates an IRA paid to a beneficiary.  It's not clear from the instructions if 4 is allowed with Q, but you could try it and see if it helps.  If not, delete the 1099-R and re-enter as-is. 

If you leave the 1099-R off, you will probably get a bill for tax due.  The IRS assumes all income is taxable unless you prove otherwise, and they will tax you even on a qualified Roth IRA distribution unless you list it on your return as non-taxable and sign your name attesting that your return is true and accurate.  

[charliekinger]

Thank you. I will try all these options and report results if I find a solution.

[dmertz]

The payer must always put a zero in box 2a if they put code Q in box7.  Code Q means that the distribution is nontaxable.  When this is entered into TurboTax, TurboTax will include the gross amount on Form 1040 line 4a but will exclude the entire amount from line 4b.  When entering this From 1099-R, be sure to indicate that the distribution is from an inherited Roth IRA by answering Yes when asked in the desktop version of TurboTax or by marking the checkbox for this purpose in the online version of TurboTax.

Regarding the RMD, if the distribution was sufficient to satisfy the RMD for the inherited Roth IRA, when TurboTax ask you to enter the required RMD, enter no more than the gross amount distributed.