topic 2021 Tax Year - 1099R and RMD in Retirement tax questions

2021 Tax Year - 1099R and RMD

tbs528 — Tue, 24 Feb 2026 08:25:18 GMT

I received a notice from the IRS that I under-reported the 1099R amount and now owe additional taxes and interest. The 1099R is entered correctly and full distribution amount is listed and stated on line 4a. That amount included the RMD amount plus additional amount. I answered the 1099R questions in TT and stated the RMD amount that was part of the distribution amount; but when TT calculated and prepared the return, it had line 4a correct but line 4b (taxable amount) was reduced via the RMD amount. So, there is a difference there and IRS claims under-reported with additional tax and interest due. Why would TT have different amounts on line 4a and line 4b?? Why did it only report RMD as taxable (4b) and not full amount (4a)?? How do I reject the IRS claim or do I really owe due to TT error?

Re: 2021 Tax Year - 1099R and RMD

DoninGA — Mon, 11 Dec 2023 17:03:17 GMT

You may have answered a question in the Form 1099-R section incorrectly.

If your 2021 Form 1099-R has a code 7 in box 7 of the form that is a normal distribution. If you did not roll over any of the distribution to another tax deferred retirement account then the taxable amount in box 2a of the Form 1099-R should have been entered on Line 4b of the Form 1040.

You may have to amend the 2021 tax return to correctly indicate the amount on Line 4b. Contact the IRS and see what they require to correct this mistake.

@dmertz

Re: 2021 Tax Year - 1099R and RMD

rjs — Mon, 11 Dec 2023 17:06:35 GMT

@tbs528 wrote:

I answered the 1099R questions in TT and stated the RMD amount that was part of the distribution amount;

TurboTax does not ask what the RMD amount was. You must have misunderstood something or entered something wrong. It's not clear where you might have entered the RMD amount.

In the PDF of your 2021 tax return, with all the worksheets, look at the 1099-R worksheet. Is the taxable amount in box 2a the same as the gross distribution in box 1? If not, look at the actual 1099-R form that you received and see if the amounts in boxes 1 and 2a are the same.

In any case, the IRS is probably right, so you should pay the amount that the IRS says you owe.

It's very unlikely that it was a TurboTax error. It was probably an entry error. If you want to, you can submit a claim under the TurboTax Accurate Calculation Guarantee, but don't be surprised if they tell you that it was a user error.

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 17:17:10 GMT

Thank You -- I will go back and check those areas.

Re: 2021 Tax Year - 1099R and RMD

VolvoGirl — Mon, 11 Dec 2023 17:25:14 GMT

Well the program does ask how much was the RMD in 2 places. I did a test return and said I took out 30,000 and 20,000 was for the RMD. But that is just so it knows you can not rollover the RMD amount to another account and to make sure you took out the full RMD. Does it say anything by line 4b? Like Rollover? @dmertz

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 17:30:12 GMT

Thanks for responding -- I checked: 1099R boxes 1 and 2a are the same and it is the gross amount; code 7 (normal distribution) and taxable amount not determined box is checked; in TT, when entering the 1099R information, the 3rd input screen asks for the following: was this an RMD for 2021 (yes is my response); was this for all or part of the RMD (part is my response); and it then asks me to state the RMD amount that was part of the gross distribution (I provided the amount for the RMD); the 4th input screen asks if I rolled over all or part (responded yes as I rolled over a portion of the distribution). I will do some checking but at least for now, I answered all the questions in TT (1099R input screens) with the correct information.

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 17:33:47 GMT

Yes -- 4b states rollover -- and the RMD was 50% of the distribution.

Re: 2021 Tax Year - 1099R and RMD

rjs — Mon, 11 Dec 2023 17:37:16 GMT

What was the amount that you rolled over? Was it the same as the RMD amount? Form 1040 line 4b should be line 4a minus the rollover amount. Could it be that the IRS overlooked the "Rollover" notation?

Re: 2021 Tax Year - 1099R and RMD

VolvoGirl — Mon, 11 Dec 2023 17:43:30 GMT

Sounds like you did it right. The IRS can make mistakes. You did rollover the extra amount? To what? And was this from a IRA or a 401K? Maybe there should be an amount on line 5?

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 17:55:15 GMT

1040 - 4b states rollover and it is the RMD amount -- gross was 35k and RMD was 17.2k

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 18:01:58 GMT

1040 - line 5a is blank and line 5b (taxable amount) is 50% of the RMD (rollover amount) -- so 17.2k is RMD/rollover on 4b and 8.1K is the taxable amount on 5b ..

Re: 2021 Tax Year - 1099R and RMD

VolvoGirl — Mon, 11 Dec 2023 18:02:05 GMT

By the way, did you efile or mail in your tax return? If you mailed it they might have typed it in wrong and missed the rollover amount. How much did they say is missing? Could it be because of any withholding taken out? The withholding probably should be part of the taxable amount on line 4b.

Re: 2021 Tax Year - 1099R and RMD

VolvoGirl — Mon, 11 Dec 2023 18:04:48 GMT

Your post about line 5 is confusing. Did you have 2 1099R forms? Line 4 & 5 are for different things. How did you get an amount on line 5b? Both 4b and 5b are the taxable amounts.

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 18:07:05 GMT

efile -- w/no errors on form and accepted return -- IRS says of the 34,669 gross (reported by others - 1099R), only the RMD (17,243) is showing so they say it is missing the balance of the gross (17,426). Like you stated earlier, I am beginning to think they missed the "rollover" explanation on line 4b

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 18:14:29 GMT

one 1099R -- I have other 1099R ( two pensions) but only one for this payor. 5a is for pension/annuities and it is blank but 5b has an amount and 5b is the amount of the two pension 1099R's ... so that makes sense for line 5b and the IRS is not questioning anything related to those two 1099R's / amounts. IRS is all about the one 1099R for the large gross distribution.

Re: 2021 Tax Year - 1099R and RMD

rjs — Mon, 11 Dec 2023 18:26:58 GMT

What are the exact amounts on Form 1040 lines 4a and 4b?

Re: 2021 Tax Year - 1099R and RMD

tbs528 — Mon, 11 Dec 2023 18:39:51 GMT

34,669 and 17,243 and 4b states rollover

Re: 2021 Tax Year - 1099R and RMD

dmertz — Mon, 11 Dec 2023 20:33:35 GMT

So it seems that your tax return reports IRA distribution(s) totaling $33,669, of which you indicated you rolled over $17,426, leaving $17,243 as taxable. As long as your RMD from your IRAs was $17,243 or less (and assuming the distribution(s) were not from an inherited IRA to a non-spouse beneficiary; the code 7 indicates it was not from an inherited IRA), your tax return seems to report the correct taxable amount.

Assuming that the rollover was to an IRA, do you have a Form 5498 that reports receipt of the rollover contribution? If the rollover was to a qualified retirement plan like a 401(k), receipt of the rollover is not reported to the IRS by the receiving plan and the IRS sometimes questions these so-called "reverse rollovers."

Re: 2021 Tax Year - 1099R and RMD

Critter-3 — Tue, 12 Dec 2023 15:13:25 GMT

If you indicated that a portion was rolled over then the IRS would look for that amount to be reported on a form 5498 from the place you rolled the distribution to ... so did you actually roll over that amount? If so present proof to the IRS in response to the notice.

Re: 2021 Tax Year - 1099R and RMD

fanfare — Tue, 12 Dec 2023 17:03:22 GMT

Whenever you do something "unusual", IRS requires an explanation statement attached to your filed return.

That would have avoided your problem.

@tbs528