topic CARES act RMD withdrawal and redeposit confusion in Get your taxes done using TurboTax

CARES act RMD withdrawal and redeposit confusion

forologia — Sat, 13 Mar 2021 15:21:56 GMT

I am 75 and took my full RMD in June 2020

Upon learning that the CARES act provided that no RMD would be required in 2020, I redposited the complete RMD withdrawal back to my IRA account in August.

The TT Deluxe questionnaire asks to choose one of the below options:

did you receive all of the RMD for 2020

did not receive all the RMD for 2020

was not required to take an RMD

Which option do I choose when the entire RMD was redeposited?

Where would the redeposit be shown in my completed 1040??

Thanks for your help

Re: CARES act RMD withdrawal and redeposit confusion

DanaB27 — Sat, 13 Mar 2021 15:40:46 GMT

Please select "was not required to take an RMD" since 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 renter the 1099-R form.

Please follow these steps to enter your 1099-R and RMD rollover:

Login to your TurboTax Account
Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R” and enter your 1099-R
Continue until "How much was a RMD?" and select "none"
Continue "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"
Continue answering the questions.

Re: CARES act RMD withdrawal and redeposit confusion

Winds Calm — Tue, 20 Apr 2021 00:32:41 GMT

I really appreciate the fact you provided an approach to solve this conundrum of informing the IRS that I returned the full RMD after learning I could return it. However, your step-by-step instructions didn't work in the Home and Business version of TurboTax for tax year 2020. Might one reason be that my RMD came from an inherited IRA? Do you have any other suggestions?

Re: CARES act RMD withdrawal and redeposit confusion

DawnC — Tue, 20 Apr 2021 01:01:42 GMT

Yes, coming from an inherited IRA will prevent you from seeing the questions regarding returning the money. Delete the 1099-R and re-enter it, but this time answer NO to the inherited IRA question. Normally, you can't return the RMD from an inherited account but 2020 is a special case. To get the questions to appear in TurboTax, answer NO to the inherited IRA question. You can't edit it, you have to delete it and re-enter it though. @Winds Calm

Re: CARES act RMD withdrawal and redeposit confusion

Winds Calm — Tue, 20 Apr 2021 01:58:36 GMT

Thanks! That worked perfectly with one slight addition to your suggestion. While re-entering the 1099-R information after deleting the original entry, as you suggested, it didn’t first work if I entered “Death” as the cause under box 7. I had to select the “normal distribution”. Then I got the right series of questions to answer, one of which had a “yes” question that included the fact that I returned all the funds. Thanks again!