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Reporting RMD on inherited Roth IRA

I am going through smart check on Turbotax, having entered in all my tax information.  I get a screen that is saying "Check This Entry.  Form 1099-R (CHARLES SCHWAB & CO,INC): RMD amount should have an amount since this IRA is inherited.  If there was no RMD for this account, enter 0 for the amount."  

 

First, I received three separate 1099-Rs from Charles Schwab so I am unsure which 1099-R it is referring to, but perhaps I can assume that it is one or both the the 1099-R forms for the two Roth IRA accounts I inherited from my mother in 2012.  I did receive an RMD from each of those accounts this past year.  But when I enter the amount of both of the RMDs (approximately $5,400) , my tax bill goes up by $1,363.  I thought that there was no tax on inherited Roth IRAs ?    Why am I getting such a huge tax liability?  Is it a problem with Turbotax? 

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2 Replies
ReneV4
Employee Tax Expert

Reporting RMD on inherited Roth IRA

To correct the tax liability, you will need to complete specific "Inherited" and "Roth" sections to show that the distribution is non-taxable.

 

First,

 

  1. Review your Form 1099-R from Charles Schwab, checking Box 2a to ensure it is zero
  2. Next, check Box 7 for the distribution Code Q or Code T
  3. If it is Code Q, TurboTax should automatically know it's tax free
  4. If it is Code T, TurboTax will ask you follow-up questions related to the 5-Year Rule before it removes the tax

 

Next, 

 

  1. Return to your 1099-R entry by clicking Review to the right of IRA, 401(k), Pension Plan Withdrawals (1099-R) in the Federal Wages & Income
  2. Click on the pencil to the right of the 1099-R
  3. Click Continue through the entries you've made
  4. Ensure you selected, I inherited this IRA, and that you have identified it as a Roth IRA, then Continue
  5. Ensure you answer Yes when asked if the Roth IRA was opened before 2021, Continue
  6. Next, "Let's get more information about your RMD", enter the distribution amount pertaining to the RMDContinue
  7. Next, select, Some of the distribution applied to the December 31, 2025 RMD (and enter the RMD amount), Continue
  8. Next, in the Review your 1099-R summaryContinue (not the pencil)
  9. Continue answering the questions
  10. Next, when you see "Let's go over any required minimum distributions (RMD), select Continue (not the pencil)
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Reporting RMD on inherited Roth IRA

Hello there ReneV4,  Very much appreciate your step by step instructions.  To report back on my attempts to apply them: 

 

1)  Checked both 1099-R forms for my two inherited IRA accounts, and Box 2a is blank on both, and both have the code Q in box 7.   These forms (as well as the other 1099-R that I received from Schwab) were both imported into Turbotax and so the information was  automatically populated. 

 

2)  When I review the 1099-R information for each of those entry (by clicking on the pencil to edit) I have indicated that they are both Roth IRAs, that they were inherited, and then it asked me for the name of the person I inherited it from, and  I entered the name of my mother and the year of her death (2012).

 

3) However, beyond that, there were no questions asking if the Roth was opened before 2021, nor was there any screen saying "Let's get more information about your RMD" or any place to list the amount of the RMD.  Therefore, I was not able to go beyond step 5 of your instructions.  So did I miss something?   

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