Why is Turbo Tax 2024 asking me to calculate the RMD on my pension to make sure I've taken enough? I've never had to do that before - my monthly pension disbursement already has the RMD calculated. I have no idea what to base the calculation on!
Say all of it is the RMD. If you need to start taking the RMD it will ask you if it is the RMD. Say yes. Anything your pension pays you is considered to be the RMD. Traditional pensions automatically fulfill the rules of an RMD. So for the RMD question put in the same amount as box 1.
If you land on a screen where is asks to enter the Required Minimum Distribution Amount in a box, just enter the total distribution received in 2024 as shown on your Form 1099-R in box 1.
If a pension plan pays you monthly then the RMD is already calculated in that payment by the plan administrator...they just don't separate it out for you. So how can Turbotax expect you to know? In turbotax for tax year 2024, you are asked what amount of your pension is for the RMD, and you must enter some data point. The answers I have seen here are to put in the amount in box 1.....I am not an expert but this is wrong. You will be taxed on whatever amount you put in there. So if you put in the amount in box 1 of your 1099R you will see your tax jump up dramatically. I decided to enter "0" to get me past the issue since that info is only for turbotax and appears nowhere on the return. AS I figure it, since you are taxed on your pension anyway, the "0" is not defrauding anyone! I have attempted to find the info from the Pension Plan Administrator but have been unsuccessful.
@Usaaguy I have been receiving a pension for the past 21 years. When I turned 70 1/2 I reported all of my annual pension as a RMD from tax year 2019 onward. There is no additional tax by claiming an RMD. The amount from box 2a on the Form 1099-R is entered on your federal tax return, Form 1040 line 5b as ordinary income.
Any federal income taxes withheld and reported in box 4 of the 1099-R flows to the Form 1040 Line 25b
Yes, you are correct but in the 2024 version of turbotax, when you enter an amount higher than zero the software adds tax for that amount. You can see it run up the numbers as you do it. You are correc t that it should not increase the taxes and if you were to do it by hand, the taxes would not increase because the IRS doesn't care. But in this year's application when you enter the data, the software adds the tax. I had not seen this in previous applications.
@Usaaguy If you are age 70 1/2 or older then the there is no increase in taxes by declaring the RMD as the annual pension income.
Are you a military retiree and selecting Non-Qualified Plan? Are you use the online editions? If so, there is a bug in the online editions when Non-Qualified Plans are selected. This has just been reported to the TurboTax Moderators of this forum.
If this is not your case, I would recommend deleting the 1099-R and re-enter manually.
I have to conclude that there is a bug. If entering the amount in box 1 or 2 of the 1099R (or any number at all) is not supposed to result in taxes on that amount then there is a bug since it clearly real- time shows your taxes increasing. I deleted the 1099r and redid it with same results. To be clear I am 77, with a qualified 401k from a Union pension. I do this every year and never was even asked this question. TTX phone support was unable to help me with this issue. I still think my best route to circumvent the issue is to enter zero when it asks for the amount of RMD to be paid by Dec 31, 2024. This results in no added tax and I can move forward with the return. Open to suggestions....thanks
UPDATE: I entered the total amount of the pension in the RMD box as you suggested. Then when asked the question, "How much of this distribution was paid in 2024", I entered the same amount. That also seemed to get me past the issue with no tax increase. Perhaps that was what I failed initially to do?