RMD from IRA rollover - confusing turbo tax questions

[barbpaul]

My 1099-R form indicates that the entire 401K distribution ($70K) was rolled over into IRA so no taxable amount is listed, but in reality I held back some money to cover the RMD because no automatic RMD was distributed. In Turbo tax I identified some of the distribution as being RMD and gave amount of $5800 as received and then listed the RMD as $5506. Turbo tax then states "It looks like the difference between your required minimum distribution and what you took out for this account is $5506. This amount could be taxed, but the rate is lower if you withdrew the remaining $5,506 during the correction window. Did you take out the remaining $5506 during the correction window?   What??? This makes no sense! All of the money held back from going into the IRA ($5800) should be taxed but without any penalties. There is no correction window that applies here. All money was received in 2024. I tried to work around this by putting in $0 for RMD so the "correction window" question did not come up but later I saw that the $5800 did not show up as taxable. What am I doing wrong? Any suggestions would be greatly appreciated!

[JohnB5677]

We can take this step by step.

1. Post your startup information
2. Enter your 1099-R details from XXX
   1. $ full amount
   2. Total Distribution
3. Do any of these situations apply to you?
   1. None of these apply
4. How much of the $XX,XXX was an RMD?
   1. Only part of this distribution was an RMD
   2. Enter RMD amount
5. Let's get more information about your Required Minimum Distribution (RMD).
   1. Enter the same number as above
6. Tell us if you moved the money through a rollover or conversion
   1. I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)
7. Did you roll over all of this $XX,XXX (Box 1) to another retirement account?
   1. No, I rolled over less than $XX,XXX.
   2. Enter the total amount less all the you withheld

This will show a rollover with a taxable amount of what you withheld.

No penalties will appear.

[barbpaul]

John,

Steps 1-5 correlate fairly well to what I see in my Turbo Tax deluxe. However, I do not see questions #6 or #7. Instead I have this prompt: "Just a few more details about your RMD. It looks like the difference between your required minimum distribution and what you took out for this account is XXX(the amount I entered for the RMD). This amount could be taxed, but the rate is lower if you withdrew the remaining XXX (the amount I entered for the RMD) during the correction window. Did you take out the remaining XXX during the correction window?"

I can't understand this reasoning, nor can I think of a work-around except to put in the RMD as other income.

Is it possible you are looking at a different version than I?

Thanks.

[fanfare]

The expert is quoting you a process from previous years.

TurboTax 2024 has changed thei interview for this scenario.

@barbpaul 

[fanfare]

"I held back some money to cover the RMD"

you have to explain in more detail what this means.

@barbpaul 

[barbpaul]

• What I meant by "I held the money back to cover the RMD" , is that I got the check for entire amount of money in 401k and deposited into the rollover IRA all of the money except the RMD which was deposited into checking account. If it makes any difference this was an inherited 401k by the spouse (my mother) and the 401k administrator said she had to take it all out and close account at this time, so we elected to do the rollover into IRA.