RMD, QCD and Roth Conversion

[mountainlover1]

In the 2021 tax year I took a distribution from a regular IRA and did the following: (1) converted almost half to a Roth IRA, (2) used the remaining amount of the distribution to take the 2021 RMD and used a portion of the RMD for QCD).

The most recent version of Turbo Tax premier will not allow me to enter these different activities. The program allows me to enter how much of the distribution was an RMD, and I can indicate that some or all was converted to a Roth IRA.

The problem comes with the question "Did you convert the gross amount (Box 1) to a Roth IRA? The choices are "Yes, all of this money was converted to a Roth IRA?" or "No, I converted less than the total" I select the second option and enter the actual amount converted to the Roth. When I try to continue to the next screen, the "Yes, all of this money was converted..." option is highlighted in red and a message saying "this info is required" appears. I cannot move forward from this point.

I was on the phone for 2 hours with a TT expert who was very knowledgeable and helpful. She finally figured out that I should create 2 different 1099-$ forms, with one showing my QCD and the other showing the remainder of the distribution. This seemed to work, but when I did the final review, this was flagged as incorrect.

[dmertz · Accepted solution]

There is no problem entering this into TurboTax.  When entering this code7 Form 1099-R with the IRA/SEP/SIMPLE box marked:

1.  On the page that asks "Do any of these situations apply to you?," mark the box to indicate that you transferred all or part of the money directly to charity.
2. On the page that asks about your RMD, indicate that only part of the distribution was RMD and indicate the amount that was RMD.
3. Enter the amount that was transferred to charity.
4. Indicate that you converted some or all of it to a Roth IRA.
5. Indicate that you converted less than the full distribution and indicate the amount converted.

TurboTax will include the full gross distribution on Form 1040 line 4a but will exclude the QCD from the taxable amount on line 4b.  TurboTax will also include the QCD notation next to line 4b.

Make sure that the amount that was converted to Roth is no more than the amount by which the distribution exceeds your RMD.

When I revisited the page that's giving you trouble, I had a problem similar to what you describe.  I got around that by indicating, "Yes, all of this money was converted to a Roth IRA" followed by clicking "No, I converted less than $xx,xxxx." before clicking the Continue button.  If that fails, I suggest deleting an reentering the Form 1099-R and trying again.

[mountainlover1]

Thank you. It finally worked when I deleted the previous 1099-R entries and started over, rather than making changes to the form I had been working on. Kind of like rebooting a computer....