Why am I getting a penalty when I took my full RMD?

[dpreas2017]

I took more than my RMD, and paid an amount toward taxes (e.g., RMD = $628, took $650, and paid $585 of that amount to taxes, per the 1099-R). I'm getting a "Check this entry" for the RMD Excess Accumulation Worksheet to enter Required RMD amount, with I enter as $628, while the Amount distributed in 2024 box is blank (and can't be changed). I'm getting hit with a $157 penalty for not meeting my RMD, even though I did. How do I remove this penalty?

[DanaB27]

Please review the instructions below.

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 "The entire distribution was an RMD"  /or select "Only part of this distribution was a RMD" and enter the amount of RMD ($628)
5. Enter the RMD amount for this account on the "Let's get more information about your Required Minimum Distribution (RMD)" screen  ($628)
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 met all of your RMD for 2024, otherwise select what is applicable. 

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 ($628)
4. On the "How much of This Distribution Applied to your December 31, 2024 RMD" select "The entire distribution applied…"  / or select "Some of this distribution…" and enter the RMD amount $628
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 met all of your RMD for 2024, otherwise select what is applicable. 

[dpreas2017]

Hi DanaB27

First off, I have a 1099-R from a traditional IRA that I use for an annual backdoor Roth IRA conversion, and I have a 1099-R from an inherited IRA with an RMD (of $628 in 2024, which I met) 

After entering my 1099-R inherited IRA details, Continue to the next screen "Do any of these situations apply to you?", where I check "I inherited this IRA".  Continue to "Someone else who passed away", enter DECEASED name and year (2019).  Continue to "Did you have nondeductible contributions for this IRA", No.  Continue to "When was DECEASE born?", after Dec. 31, 1951.  End of interview.

When I see "Here's your 199-R info" showing both 1099-Rs, Continue to "...disaster distribution before 2024?", No, Continue to "No. I did not make and track nondeductible contributions to my IRA", Continue to "Tell us the Value of your traditional IRA", which I assume the be the traditional IRA associated with my backdoor Roth IRA contribution, so 0 since I converted the full amount.  Continue to "Did You Miss a Required Distribution From Any Retirement Accounts?", where I select "None of these plans failed to withdraw the RMD."  End of interview.

At no time did I see the following:

1. On the "Required Minimum Distribution" screen enter RMD for this account ($628)
2. On the "How much of This Distribution Applied to your December 31, 2024 RMD" select "The entire distribution applied…"  / or select "Some of this distribution…" and enter the RMD amount $628

Upon final review of my return, a review is flagged to enter the "Required RMD amount" on the worksheet, and I enter $628, where the Amount distributed in 2024 in blank, and I receive a notice of $157 penalty due to missing RMD.  Could my interview be different since I also have the 1099-R traditional IRA for my backdoor ROTH conversion.

[DanaB27]

Are you using TurboTax Desktop or TurboTax Online?

You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

The instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

[dpreas2017]

@DanaB27 

Diagnostic file sent. 

I also noted a recent thread reporting a similar issue, titled "TT calculates a penalty for taking full lRMD when I did enter that I took it all".

Toke number: 1291280

Thanks

[DanaB27]

Thank you. I reviewed your return.

 If you are using TurboTax Desktop the issue has been fixed and you should get the RMD follow-up questions. Please make sure you update the software. You might have to delete and reenter the Form 1099-R with code 4.

If you are using TurboTax Online there is supposed to be an update at the end of the week that should fix this issue. You might have to delete and reenter Form 1099-R with code 4 after the update to trigger the questions.

If the update doesn't fix the issue then please delete and reenter the Form 1099-R with code 4 and run the smart check again. One the "Check This Entry" screen for RMD enter $0. This should resolve the error and remove the penalty. 

You are not required to file Form 5329 if you met all of your RMD for 2024. The RMD Excess Accumulation Worksheet isn't sent to the IRS.