RMD taken correctly, but penalty assessed

I had the same unpleasant surprise, and posted an inquiry yesterday asking how to fix this problem.  More than 36 hours later I still have no response from TT.

accoring to one taxpayer the recent update changed the RMD interview to correct problems.

Perhaps there are new issues with that "solution".

@SPQ 

@arusso03 

Yes - that's clearly what must have happened (a "fix" to another RMD issue produced a new problem). 

No response or update yet from TT.  This is such an obvious error, you'd think they would be able to sort it out quickly.

Having the same problem.  It is saying I owe a 10% penalty on my RMD.  Somehow, the newest update, by following the questions, is adding my RMD twice and penalizing me on the extra amount.  They need to get this fixed ASAP.

I believe the issue has been corrected.  I posted the original post but went back online on Thursday (Feb 27) and it was now showing the correct taxes owed (no penalty).   I revisited the RMD section and answered the questions again and all looked good — so fingers crossed. 

Hasn’t been fixed for me.  I just opened mine today to double check everything.  Had an update and that is when mine messed up.  I filled in the info from my 1099.  The gross distribution is my full RMD.  But it is charging me a 10% penalty on the same amount.  It doubled my RMD and says I only took out half.  I called Turbo Tax.  Was on the phone for quite some time.  Finally he said he was sending it to IT because it has to be a software problem.

That is so frustrating. That’s exactly what had happened to me, yet it was fixed on mine after almost a week. I assume you signed out and then signed in to refresh. 
I’m very disappointed in Turbo Tax this year - this is not a complicated problem to address  

It is very frustrating.  I did sign out and back in, twice.  Nothing changed.

It is very frustrating.  I did sign out and back in, twice.  Nothing changed.

I would go and re-do the RMD-related area (1099-Rs) and answer all the questions again (if you haven't already done that). When mine was messed up, it kept coming back with a question about whether I took the remaining RMD within a certain "window" (this was completely irrelevant because I had satisfied my entire RMD so there was nothing further to take), and that's when it would assess the 25% penalty.   When it seemed to have been corrected, and when I worked on that section again, it no longer asked that question - it only asked me what my RMD was and exactly how much RMD I had taken.  It then recognized it as the correct amount and did not assess the penalty.  I don't understand what's going on with yours.  If they don't get it corrected for you in a couple weeks' time, maybe you should switch to another tax prep service. 

If you cannot get it to work then please try to delete the Form 1099-R entries and reenter them. If you are using TurboTax Online delete your cookies and clear you cache before entering the Form 1099-R again.

Please follow these steps in TurboTax Online:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “1099-R”
3. Click on “Jump to 1099-R” and enter your 1099-R
4. Continue until "How much of the $XXXXX was a RMD?" screen and select "Only part of this distribution was a RMD" and enter the amount of RMD /or select "The entire distribution was an RMD" (if this distribution includes RMD for other IRA accounts then you included the amount here)
5. Enter the RMD amount for this account on the "Let's get more information about your Required Minimum Distribution (RMD)" screen
6. On the "Review your 1099-R info" screen click "Continue"
7. On the "Did You Miss a Required Distribution From Any Retirement Accounts?" screen select "None of these plans failed to withdraw the RMD". If you had one IRA where you didn't take the RMD but took it from your other IRAs then select "An IRA..."
8. On the "Total RMD for all other IRAs" screen enter the RMD from your other IRAs (where you didn't take a distribution from).

In TurboTax Desktop:

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R” and enter your 1099-R
3. On the "Required Minimum Distribution" screen enter RMD for this account 
4. On the "How much of This Distribution Applied to your December 31, 2024 RMD" select "Some of this distribution…" and enter the RMD amount / or select "The entire distribution applied…"  (if this distribution includes RMD for other IRA accounts then you included the amount here)
5. On the "Your 1099-R Entries" screen click "Continue"
6. On the "Did You Miss a Required Distribution From Any Retirement Accounts?" screen select "None of these plans failed to withdraw the RMD". If you had one IRA where you didn't take the RMD but took it from your other IRAs then select "An IRA..."
7. On the "Total RMD for all other IRAs" screen enter the RMD from your other IRAs (where you didn't take a distribution from).

Please try workarounds from dmertz:

For code 7D, omit the code 7 and enter only the code D.

For code 4D, indicate that the decedent died after December 31, 1951.

[Edited 3/10/2025 | 6:55am PST]

@TerriLa

I have deleted my 1099 R.  Twice.  Still does not work.  When I type in 4D for my distribution code I get these screens: 1) Let’s double check your info - is the IRA/SEP/Simple box checked?  Answer is No. 2) were you employed as a public safety officer?  Answer is No. 3) Tell us when this person was born. Answer is born before January 1, 1952. 4) was this distribution from a 403b plan.  The only answer choices are a) yes, this is a 403b plan or b) no, it’s another type of qualified retirement plan.  My plan is neither.  It is a non qualified annuity that I inherited four years ago.  I cannot answer this question truthfully because my plan is neither a 403 b nor a qualified retirement plan.  There are no other options to choose from. If I click on other qualified plan, then I am falsifying my form.  If I do click on other qualified plan, then it does take me to the RMD question.  I enter the RMD, which is the amount of my gross distribution.  Then it asks how much of the distribution applied to my December 31, 2024 RMD.  I answer choices of entire, some or none.  My gross distribution was my entire RMD.  But if I click on any of the three choices I get a screen asking me if I took out the remaining amount during the correction window.  The remaining amount that is shown is the same amount as my gross distribution.  And then it charges me a 10% penalty.  That is wrong.  I don’t have any remaining amount that is due.  At no point do I get a question asking if I missed a payment.  And I did not.

I paid over $70 for this program because I needed the business one.  I am getting really upset that this is not being fixed.  There are too many of us having the same issue with your program and we are getting the run around.

Here are my screens that still pop up every time I delete the 1099 and re enter it.  TT needs to get this fixed.  It should not be asking me if my distribution was from a 403 b or other qualified plan when I have entered a distribution code of D.  TT is about to lose a long-time user.

Yes, this is an anomaly in TurboTax that is related to how the IRS treats retirement income reported on a 1099-R, which is that all retirement income is subject to RMD, and everything reported on a 1099-R is retirement income. 

You were correct to choose 'another type of qualified retirement plan' and enter the total distribution amount from Box 1 (or the taxable amount from Box 2a, if it's different)  as the RMD amount in order to complete your entry.  The funds are taxed the same way in either circumstance, and the 4D Code indicates that the amount is ineligible for rollover.

Here's detailed info from the IRS on Pensions and Annuities and more on Form 1099-R.

@TerriLa 

But my plan is not a qualified plan.  And by entering the amount of my distribution as the RMD, it takes me to another screen asking if I took out the remaining amount, which just so happens to be the total amount of my gross distribution, before the withdrawal window closes.  There is no remaining amount that needed to be withdrawn.  My gross distribution is the full RMD amount.  It then proceeds to charge me a 10% penalty on the amount they said I did not withdraw in time.  Then TT flags the whole thing as an error.  The only way for it to not charge me a penalty on my gross distribution is to put 0 for the RMD.  Why will you not listen to any of us?  There is a major problem with your TT software.  I am giving you one more week to fix the error in your software before I stop using TT for my tax software.  I have been a loyal customer for years, but if I can’t trust your program, then I am done with you.

I am in the exact same situation.  Do we just continue to wait for a fix?  I was able to remove the D from the code box and answer a few more questions.  TT accepted it that way and ready to submit.  I haven’t yet because it’s not correct.  Thoughts? 

Same experience here. Never had any issue re. RMD in previous RMD years, now hammered with penalties for NO APPARENT REASON!!! I have used the AARP calculator and the amounts come out to within 1 cent of the actual RMD amount. What on earth is going on here? It would be nice necessary to hear from Intuit on this issue. VERY DISTRESSING!!!

This issue is going from bad to worse. Yesterday I was getting a penalty of ~$2300. Today I have deleted 1099-R's, cleared cache, updated software, started a new return and re-entered 1099-R data as suggested by DanaB27 and I am now told I have a $9200 penalty!! All this after calculating RMD's using the ARPA calculator and finding that my broker's numbers are accurate to within a penny!!!

This is not going well and I am looking for a an alternative to TurboTax.

Please help me fix this...

From the original post:

"The only way to get TT to calculate the correct tax is to say that my required RMD was $0,"

IRS doesn't care what you tell TurboTax. They are looking at your Form 1040.

@arusso03   I think this is the simplest solution proposed and the first time I've seen it.

Oh no, TBGrant!  That is not good.  TT seems to have brushed this problem aside, either basically telling us it is user error and we don't know what we are doing when entering our 1099s and RMDs, or telling us to lie on our tax return and take the penalty that TT is assessing because it says we failed to take our full RMD.  So many people are having this problem.  I used to feel I could trust TT.  Not anymore.  I hate to have to pay more for another tax software program, but looks like it is coming to that.  

TerriLa - we appear to be in the same boat, i.e. no response I can see from TT. This issue has brought me to the edge. Fortunately, I got a cogent tip from @arusso03 that has me through the storm. I'm hoping to finish my return today and will check it very carefully before filing. I can find no other means of taking TT to task on this, other than promising to be a former customer with a very bad attitude. Thanks for your input.

Thanks much for the tip. It looks like this workaround will get me through this year's return, but I'm quite grumpy about TT not responding to the issue. Obviously a coding error on their end. Thinking evil thoughts about why this would happen and what might result...

Good luck @TBGrant.  It's just upsetting that you have to literally input incorrect RMD information in order for the tax liability to be calculated correctly.  Hopefully, the backup page showing the (incorrect) RMD amount is not actually transmitted to IRS with your return (I don't believe it is).  It's terribly disappointing that no one has contacted you to address this software issue. 

@arusso03  The tip about entering 0 for the RMD was helpful.  It's true that the IRS only cares about the accuracy of the return, not the answers to TT questions.  We shouldn't have to be going through all this, but it's a way to make some progress.

Thank you.