topic Re: Required Minimum Distribution in Retirement tax questions

Required Minimum Distribution

tahillen014 — Fri, 23 Apr 2021 21:56:05 GMT

RMD for 2019 was not totally distributed in 2019 because of a Notary error. The final portion was distributed on January 2, 2020 and I received a 1099-R in that year. In 2019, TurboTax prepared a form 5329 for me and included my Waiver explanation statement. I have heard nothing from the IRS about it. Since this distribution was an RMD, although not for 2020, do I need to somehow include an explanation with the 2020 return that this distribution applies to 2019 RMD requirement? TurboTax is not preparing a form 5329 for me this year.

Re: Required Minimum Distribution

rjs — Fri, 23 Apr 2021 22:08:35 GMT

No, you do not have to include any explanation with your 2020 tax return, and you do not include Form 5329 in your 2020 return. Just enter the 1099-R. It doesn't really matter that it's for 2019. The explanation and the waiver were all taken care of on your 2019 tax return.

Re: Required Minimum Distribution

Bsch4477 — Fri, 23 Apr 2021 22:10:50 GMT

You don’t have to file a form 5329. Just report the distribution.

Re: Required Minimum Distribution

tahillen014 — Sat, 24 Apr 2021 03:19:07 GMT

Thanks for the reply. The responses go with what I was thinking and give me some much-appreciated confidence in this course of action. Thanks so much!

Re: Required Minimum Distribution

tahillen014 — Sat, 24 Apr 2021 03:20:31 GMT

Thanks for your answer. This gives me a plan and some confidence in it. Thanks again!

Re: Required Minimum Distribution

hwill2105 — Tue, 27 Apr 2021 22:51:27 GMT

TurboTax say I owe a 4,042 tax for early withdrawal. what do i do to correct this?

Re: Required Minimum Distribution

DawnC — Tue, 27 Apr 2021 23:08:27 GMT

Delete your 1099-R and re-enter it. Do NOT indicate that the distribution was an RMD. After you enter it, you will be asked if the distribution was covid-related. If the distribution was covid related, TurboTax will remove the early withdrawal penalty and ask you if you would like to spread the tax over three years.

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

You qualify if:

You, your spouse, or your dependent are diagnosed with COVID-19
You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
You had work hours reduced to COVID-19
You’re unable to work due to child care closure or hour reduction

The distribution would be taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes. @hwill2105