The CARES act of 27 Mar waives the RMD for 2020 and for 2019 for those who turned 70 in the first half of 2019. I can't find this anywhere in Turbo tax and the program Really wants me to take an RMD. Will I encounter problems if I just say no RMDs were taken and finish doing my taxes or should I go back and do all the calculations to see how much RMDs are required rather than having to prove they were waived.
TT should not be requiring a RMD for 2019 if you turned 70.5. If it asked if you received your RMD, try answering yes. Since no RMD was required that is correct. See the last answer to this prior question. https://ttlc.intuit.com/community/retirement/discussion/as-my-1st-yr-rmd-i-m-making-an-ira-withdrawal-in-mar-2018-for-tax-year-2017-since-i-don-t-have-a/00/480277
Note this has nothing to do with the CARES Act. The cares act did not change anything related to RMD's taken (or required to be taken) DURING 2019. Your case the RMD for 2019 is required to be taken in 2020.
Some detail:
CARES Act section 2203 applies for RMDs required to be taken in 2020. It does not apply to RMD's taken during 2019. If you turned 70.5 in 2019 then a 2019 RMD was required but could be taken by April 1, 2020. If you took it in 2019 that's done. But if you didn't take it in 2019, then you aren't required to take it during 2020.
(FYI 70.5 age increased to 72 for 2020 and later by the SECURE act).
Take a look at the law's text below and feel free to reply if you find something different in it (or elsewhere).
This is the text of the act, with my highlights.
SEC. 2203. TEMPORARY WAIVER OF REQUIRED MINIMUM DISTRIBUTION
RULES FOR CERTAIN RETIREMENT PLANS AND ACCOUNTS.
(a) IN GENERAL.—Section 401(a)(9) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:
‘‘(I) TEMPORARY WAIVER OF MINIMUM REQUIRED DISTRIBUTION.—
‘‘(i) IN GENERAL.—The requirements of this paragraph
shall not apply for calendar year 2020 to—
‘‘(I) a defined contribution plan which is
described in this subsection or in section 403(a)
or 403(b),
‘‘(II) a defined contribution plan which is an
eligible deferred compensation plan described in
section 457(b) but only if such plan is maintained
by an employer described in section 457(e)(1)(A),
or
‘‘(III) an individual retirement plan.
‘‘(ii) SPECIAL RULE FOR REQUIRED BEGINNING DATES
IN 2020.—2020.—Clause (i) shall apply to any distribution
which is required to be made in calendar year 2020
by reason of—
‘‘(I) a required beginning date occurring in
such calendar year, and
‘‘(II) such distribution not having been made
before January 1, 2020.
‘‘(iii) SPECIAL RULES REGARDING WAIVER PERIOD.—
For purposes of this paragraph—
‘‘(I) the required beginning date with respect
to any individual shall be determined without
regard to this subparagraph for purposes of
applying this paragraph for calendar years after
2020, and
‘‘(II) if clause (ii) of subparagraph (B) applies,
the 5-year period described in such clause shall
be determined without regard to calendar year
2020.’’.
Indicate either that no RMD was required or indicate that you received all of the RMD for 2019. Either answer will prevent 2019 TurboTax from preparing the unneeded Part IX of Form 5329.
Thank you both. Following up on that, if I click yes we took all our RMDs and the amount is more than the required amount, does it matter? Can you designate All your disbursement an RMD? Thanks
Yes, you can indicate that all of your distribution was RMD as long as you didn't roll any of it over to another qualified retirement account. TurboTax limits reporting rollovers to the amount in excess of the amount that you indicate is RMD,
[edited to say on or after Feb 1, not after]
New information. It appears that you can "undo" a RMD taken on or after Feb 1, 2020 until July 15, 2020. Basically the 60-day rollover period is extended until July 15th 2020. January rollovers are not extended. Inherited IRA's do not get the extension either.
I got this from https://www.vanguard.com/pdf/carescal.pdf which also says the IRS may change the details.
Actually, the 60-day deadline has been extended to July 15 for any distribution taken on or after February 1 (subject to the normal one-rollover-per-12-months limitation on IRA distributions),
IRS Notice 2020-23, issued on April 9 extends time limited transaction defined in IRC §1031 and other time limited provisions which includes the IRA rollover 60 day limit to July 15 for distributions in Feb 2020 or later.
https://www.irs.gov/pub/irs-drop/n-20-23.pdf
I just sent the following to Vanguard
" According to the new IRS Notice 2020-23, as long as you took the distribution on or after February 1, 2020, you have an extension until July 15 to complete your 60-day rollover. You must also have not already completed a 60-day rollover in the last year. " Since I'm not 72 yet, can I return distribution via this Rollover rule where the distribution was not an RMD? If so, please inform me what form I would use to do this.
Are you saying the answer is yes and it is not COVID-affect dependent and not RMD-dependent.?
Sorry, I'm not very good at wading through IRS notice gobbledygook.
To do it, do I just write a letter of instruction and mail in a check for deposit ?
A distribution received by any individual in 2020 is not an RMD and can be rolled over (subject to the one-rollover-per-12-months rule if the distribution is from an IRA). The individual does not need to be an eligible individual with respect to a Coronavirus-Related Distribution. The deadline for completing the rollover of a distribution received after January 2020 is the 60th day after the date of the distribution or Junly 15, 2020, whichever is later.
thanks. I made the exact same point to my nephew a week ago. but when it comes to my own IRA, I drew a blank.
This just in. All RMDs taken in 2020 (even in January) can be rolled over through August. And it does not count against your once every 12 months limit. Wow.
https://investornews.vanguard/what-the-cares-act-means-for-you/
In July 2020 I instructed my finance person at Charles Schwab
to calculate my RMD for 2020 and take the necessary amount out of my IRA Rollover (this was before the government waived the taking out of the RMD for 2020). When my finance person found out about the waiver he advised me to deposit the money that was taken out back into the IRA Rollover, which he did on July 7, 2020. I have the form 1099-R stating that I have taken the RMD money out of my IRA but now I won't get Form 5498 until May which will show that I made the deposit of the RMD back into my IRA in July.
How do I handle this situation on the Turbo Tax Form?
Please advise as soon as possible. Thank you.
Please follow these steps to enter your 1099-R and RMD rollover:
RMDs were waived for 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and re-enter the 1099-R form.
You can verify your entry by looking at your Form 1040 line 4 or 5:
If you are under the age of 72, you may have to temporarily change your age to 72 for the rollover then when finished, change your age back.
What if you just didn't take the RMD that you were supposed to in 2020? There was an amount indicated in the last statement of 2019 in my account telling me how much I had to take in 2020. I had till Dec 31,2020 to take that amount. I had entered a note in my calendar for the middle of Dec. 2020 to remove this RMD amount but I didn't take the amount out because I found that you didn't have to take it in 2020. I have received no 1099-R so far for this account. Probably because I didn't take the distribution for the RMD. But how do I enter this information in TT? The program is saying I needed to take an RMD for 2020 and then it has those three questions that you have to choose from. Should I just choose the one that says I wasn't required to take the RMD?
Yes. The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, waives required minimum distributions during 2020 for IRAs and retirement plans, including beneficiaries with inherited accounts. This waiver includes RMDs for individuals who turned age 70 ½ in 2019 and took their first RMD in 2020.
The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020 taxes.
So I'm guessing that I should enter in TT that I was not required to take a RMD for 2020?
Where exactly in TurboTax 2020 interview process does it ask if I am required to take RMD ?? Per CARES Act I did not take RMD...you would think there would be some type of waiver form in TurboTax.
It will ask when you enter your 1099-R, but they (RMDs) were waived in 2020. So, if you did not get a 1099-R, you don't have to do anything. There is no RMD requirement for 2020. If you did receive a 1099-R, but you returned the money, when you enter the 1099-R, say none of it was an RMD and then you will see the option to say you returned the money. If you say it was an RMD, you won't see the option to say you returned the money. @cruisefor2
My dad is 89 and chose not to take his RMD’s in 2020. However, he keeps all of the names, addresses of his various funds in TT under the section for 1099-R’s. He was ready to file and the system keeps sending him back to review his 1099-R’s. There is no info in the 1099-R forms. He has answered all of the following questions correctly. Does he need to delete all of the 1099-R info from the previous years? He was hoping not to do that, as he didn’t want to have to re-enter all of the info for tax year of 2021. Any guidance or suggestions would be greatly appreciated.
@DawnC wrote:It will ask when you enter your 1099-R, but they (RMDs) were waived in 2020. So, if you did not get a 1099-R, you don't have to do anything. There is no RMD requirement for 2020. If you did receive a 1099-R, but you returned the money, when you enter the 1099-R, say none of it was an RMD and then you will see the option to say you returned the money. If you say it was an RMD, you won't see the option to say you returned the money. @cruisefor2
What if you did receive a 1099-R for some (but not all) of the amount that you would have been required to take? Turbotax asks "Was this withdrawal an RMD for 2020"? The way it is worded, it is implied I am supposed to answer yes. It will subsequently ask to tell more about the distribution. There is an option to say "I was not required to take an RMD for 2020."
So it's not clear if this is not considered an RMD because there was no REQUIRED Minimum Distribution, or whether it was an RMD, but the RMD wasn't required, or... ???
Thank you...
Answer NO not RMD.
Since there is no RMD required for 2020, after you enter the 1099R say it was NOT an RMD and then that you rolled it over (even if back into the same account). Was any withholding taken out? If it was then did you replace the withholding with your own money? Otherwise the withholding will be a taxable distribution itself. You will get credit for the withholding taken out on 1040 line 25b.
If you already entered the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and renter the 1099-R form.