Inherited Roth RMD

[lbenioff25]

I have two inherited IRA accounts.  When I imported the regular IRA's 1099R I was asked about the RMD, but not so for the ROTH IRA.   I have two issues.  1) What didn't Turbo Tax ask about the RMD on the Inherited Roth and 2) Turbo Tax is showing that I needed to take more money as an RMD, but doesn't indicate which account is at issue.

[KrisD15]

I see your issue was resolved, but I thought I would edit my original answer for anyone else viewing your post. 

You say both accounts were inherited, and the rules for RMD and time to deplete inherited accounts have changed recently. 

How you take Required Minimum Distributions and how those amounts are calculated depend on several factors, such as your relationship to the original owner and the year the account was inherited.  If the original owner passed in 2024, there could be a Required Minimum Distribution required to be made in regards to that owner. 

If a RMD needs to be made, the distribution can be made from multiple accounts as long as the accounts are similar (traditional or Roth) and if inherited, inherited from the same person. 

Although the requirement to take yearly distributions has replaced the option to hold and deplete the account over a period of 5 or 10 years for some, the penalty for non-compliance has been waived for tax year 2024. 

HERE is an IRS link about 5 and 10 year rules

HERE is a link about the rules being waived

HERE is a link about RMD for inherited Traditional IRA and inherited Roth IRA

If you still feel there is an issue, can you continue the question and provide more details such as 

when the accounts were inherited

what your relationship to the original own was

what you did with the accounts

where does TurboTax indicate more distribution needs to be made (which screen)?

[Edited 3/3/2025 I 3:24pm PST]

@lbenioff25 

[dmertz]

TurboTax developers have apparently failed to recognize that Roth IRAs inherited from a decedent dying before 2020 or Roth IRAs inherited by an Eligible Designated Beneficiary, are subject to annual RMDs, and have failed to implement the RMD questions for distributions from inherited Roth IRAs.  As long as any RMD of the inherited Roth IRA was satisfied, there is no need to be concerned about this omission from TurboTax's programming.

TurboTax only knows as the amount of RMD that you are required to take from what you tell TurboTax that you are required to take.  If TurboTax thinks that you have failed to complete an RMD, somewhere you have told TurboTax an amount of RMD that you were required to take.  Since TurboTax fails to ask about RMDs for inherited Roth IRAs, it seems that you would have to have entered this during the entry of some other Form 1099-R that has nothing to do with a Roth IRA.  Make sure that when asked how much RMD you were required to take that you do not include any RMDs required of any inherited Roth IRAs.

[lbenioff25]

I think the issue is that the financial institution made a mistake on the 1099R form Distribution code.  When I changed to code in Trubo Tax I was then prompted for the RMD and the error message went away.

[dmertz]

The code in box 7 of the Form 1099-R that reports the distribution from the inherited Roth IRA should be either T or Q, no other code.

[Opus 17]

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@lbenioff25 wrote:

I think the issue is that the financial institution made a mistake on the 1099R form Distribution code.  When I changed to code in Trubo Tax I was then prompted for the RMD and the error message went away.

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RMDs for IRAs that you directly own are not combined with RMDs from inherited IRAs.  They must be calculated and satisfied separately.  

The reason you are asked if you took your RMDs, is that there are certain things you are not allowed to do until you take your RMD.  For example, you can't rollover or convert an IRA until you have taken your RMD, and you can't contribute to a new IRA using RMD money, so Turbotax needs to compare your RMDs to your income.  As long as you are not doing either of those things, the fact that Turbotax does not ask about RMDs for some inherited IRAs will not cause any problems for you.  

[lbenioff25]

I was wrng about the Financial institution making a mistake; the forms were correct.  I seems that Trubo Tax is the issue with it not recognizing how to deal with Inherited Roth IRAs.