topic RMD from IRA rollover - confusing turbo tax questions in Retirement tax questions

RMD from IRA rollover - confusing turbo tax questions

barbpaul — Sun, 26 Jan 2025 02:49:30 GMT

My 1099-R form indicates that the entire 401K distribution ($70K) was rolled over into IRA so no taxable amount is listed, but in reality I held back some money to cover the RMD because no automatic RMD was distributed. In Turbo tax I identified some of the distribution as being RMD and gave amount of $5800 as received and then listed the RMD as $5506. Turbo tax then states "It looks like the difference between your required minimum distribution and what you took out for this account is $5506. This amount could be taxed, but the rate is lower if you withdrew the remaining $5,506 during the correction window. Did you take out the remaining $5506 during the correction window? What??? This makes no sense! All of the money held back from going into the IRA ($5800) should be taxed but without any penalties. There is no correction window that applies here. All money was received in 2024. I tried to work around this by putting in $0 for RMD so the "correction window" question did not come up but later I saw that the $5800 did not show up as taxable. What am I doing wrong? Any suggestions would be greatly appreciated!

Re: RMD from IRA rollover - confusing turbo tax questions

JohnB5677 — Sun, 26 Jan 2025 16:12:02 GMT

We can take this step by step.

Post your startup information
Enter your 1099-R details from XXX
1. $ full amount
2. Total Distribution
Do any of these situations apply to you?
1. None of these apply
How much of the $XX,XXX was an RMD?
1. Only part of this distribution was an RMD
2. Enter RMD amount
Let's get more information about your Required Minimum Distribution (RMD).
1. Enter the same number as above
Tell us if you moved the money through a rollover or conversion
1. I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)
Did you roll over all of this $XX,XXX (Box 1) to another retirement account?
1. No, I rolled over less than $XX,XXX.
2. Enter the total amount less all the you withheld

This will show a rollover with a taxable amount of what you withheld.

No penalties will appear.

Re: RMD from IRA rollover - confusing turbo tax questions

barbpaul — Sun, 26 Jan 2025 21:26:13 GMT

John,

Steps 1-5 correlate fairly well to what I see in my Turbo Tax deluxe. However, I do not see questions #6 or #7. Instead I have this prompt: "Just a few more details about your RMD. It looks like the difference between your required minimum distribution and what you took out for this account is XXX(the amount I entered for the RMD). This amount could be taxed, but the rate is lower if you withdrew the remaining XXX (the amount I entered for the RMD) during the correction window. Did you take out the remaining XXX during the correction window?"

I can't understand this reasoning, nor can I think of a work-around except to put in the RMD as other income.

Is it possible you are looking at a different version than I?

Thanks.

Re: RMD from IRA rollover - confusing turbo tax questions

fanfare — Mon, 27 Jan 2025 01:31:04 GMT

The expert is quoting you a process from previous years.

TurboTax 2024 has changed thei interview for this scenario.

@barbpaul

Re: RMD from IRA rollover - confusing turbo tax questions

fanfare — Mon, 27 Jan 2025 01:32:30 GMT

"I held back some money to cover the RMD"

you have to explain in more detail what this means.

@barbpaul

Re: RMD from IRA rollover - confusing turbo tax questions

barbpaul — Mon, 27 Jan 2025 02:56:13 GMT

What I meant by "I held the money back to cover the RMD" , is that I got the check for entire amount of money in 401k and deposited into the rollover IRA all of the money except the RMD which was deposited into checking account. If it makes any difference this was an inherited 401k by the spouse (my mother) and the 401k administrator said she had to take it all out and close account at this time, so we elected to do the rollover into IRA.

Re: RMD from IRA rollover - confusing turbo tax questions

MaryK4 — Mon, 10 Feb 2025 21:54:33 GMT

@barbpaul There was an issue with the RMD that may have been resolved. If you st5ill are having the same issue, I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

Sign into your online account.
Locate the Tax Tools on the left-hand side of the screen.
A drop-down will appear. Select Tools
On the pop-up screen, click on “Share my file with agent.”
This will generate a message that a diagnostic file gets sanitized and transmitted to us.
Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

Open your return.
Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
This will generate a message that a diagnostic copy will be created. Click on OK and the tax file will be sanitized and transmitted to us.
Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)