Hello, the current 2022 Turbo Tax Deluxe desktop software incorrectly reports the IRS penalty for insufficient withdrawing of RMD amounts at 50% of the shortfall. The actual penalty was updated and changed to 25% by Congress in Dec. 2022.
After having spent time waiting for alleged updates when opening Turbo Tax for each use, this oversight should have been corrected by now Feb 16, 2023. Given limitations of file space allowed here, unable to upload proof of your software screens.
Have a good day.
The SECURE 2.0 Act reduces the penalty to 25% in all cases. In addition, the penalty drops down to 10% if you take the necessary RMD by the end of the second year following the year it was due.
However, these penalty-reduction provisions only apply beginning tax year 2023.
This is an extract of the Secure 2.0 Act:
Section 302, Reduction in excise tax on certain accumulations in qualified retirement plans.
Section 302 reduces the penalty for failure to take required minimum distributions from 50 to 25
percent. Further, if a failure to take a required minimum distribution from an IRA is corrected in
a timely manner, as defined under this Act, the excise tax on the failure is further reduced from 25
percent to 10 percent. Section 302 is effective for taxable years beginning after the date of
enactment of this Act.