Form 1099-R QCDs not offseting RMD

[susannawtang]

TurboTax does not offset RMD with QCDs and adding a tax penalty.

[DanaB27]

Please review the instructions below.

For 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. On the "Do any of these situations apply to you?" screen select "I transferred all or part of this money directly to charity"
5. 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 (if this distribution includes RMD for other IRA accounts then you included the amount here)
6. Enter the RMD amount for this account on the "Let's get more information about your Required Minimum Distribution (RMD)" screen
7. Enter how much your transferred to charity
8. On the "Review your 1099-R info" screen click "Continue"
9. 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. 

For 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
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 (if this distribution includes RMD for other IRA accounts then you included the amount here)
5. Answer the "Transfer to Charity" screen
6. On the "Your 1099-R Entries" 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. 

If you had more than one IRA that required RMD but had one IRA where you didn't withdraw anything because the other IRA covered the RMD then select "An IRA..." on the "Did You Miss a Required Distribution From Any Retirement Accounts?" screen. And then on the "Total RMD for all other IRAs" screen enter the RMD from your other IRAs (where you didn't take a distribution from).

[susannawtang]

I followed your instructions after installing the latest version of TurboTax. No errors. The RMD for this account was $18,380. $8,300 was distributed out. The total QCD amounts ($50k) are larger than the amount that should apply to the remaining RMD ($10,080). My return now has a Form 5329 Additional taxes on Qualified Plans. Part 1 line 2 has $1,119 with exception number "12". I don't see the $1,119 elsewhere and don't know what this form is for and if it is the result of the cash distributions and QCDs. Still confused.

[DanaB27]

Code 12 on line 2 of Form 5329 means: Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R. Include on line 2 the amount you received when you were age 59½ or older. 

Do you have an entry on line 1 of Form 5329?

Can you please verify your codes in box 7 of your Form 1099-Rs and your entries in TurboTax?

If you still cannot figure out where this is coming from 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.

@susannawtang 

[susannawtang]

Hi,

Before sending you the diagnostic file, let me tell you what I entered and see if you can figure it out.

Form 1099-R has same amount on box 1 and box2a. Distribution code 7 and IRA/SEP/SIMPLE box checked. I entered the RMD due by 12/31/24 "$18,380" which is the RMD for this account. I picked "Some of this distribution applied to the 12/31/24 RMD" and Amount applicable to 12/31/24 RMD "$18,380". However, only $8,300 cash was distributed out and the remaining $10,080 was "part of the distribution transferred to charity" and "amount transferred to charity" is $50,000. The balance of the total distribution less the cash distribution and QCDs was entered as the "Amount converted to a Roth IRA account".

Thanks,

Susanna

[susannawtang]

I was reading another post regarding Form 5329-T. It was a bug of sorts. It was suggested to delete the Form 1099-R and the Form 5329-T and re-entered the Form 1099-R. I did that and the Form 5329-T did not reappear. There had been a number of recent updates to TurboTax including things relating to QCDs. I hope the bug has been fixed.