IRA RMD Error Introduced After Recent TTax Update

[8312782560]

I believe a recent TTax update has introduced an error.

I had finished my return and was ready to file my Federal return when I was called away for about a week.  When I again opened my return TTax did an automatic update.  I immediately noticed that my Fed Tax Due had changed from $4660 to $23,082.

A message popped up saying that the extra $18,422 Fed tax was due to a "Tax on excess accumulations in retirement account".  There was a "more info" option which opened a pop-up explaining that there is a 25% penalty for not taking IRA RMDs.

The extra $18,422 Fed tax is consistent with a 25% penalty on the total of the 3 IRA RMDs entered in TTax before the software update.

[DanaB27]

Please go back through the retirement interview. Since you met your RMD for 2024 you should not have a penalty of Form 5329.

Please follow these steps in 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. Continue until "How much of the $XXXXX was a RMD?" screen and select "Only part of this distribution was a RMD" and enter the amount of RMD /or select "The entire distribution was an RMD" (if this distribution includes RMD for other IRA accounts then you included the amount here)
5. Enter the RMD amount for this account on the "Let's get more information about your Required Minimum Distribution (RMD)" screen
6. On the "Review your 1099-R info" 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. 

In 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 "Some of this distribution…" and enter the RMD amount / or select "The entire distribution applied…"  (if this distribution includes RMD for other IRA accounts then you included the amount here)
5. On the "Your 1099-R Entries" screen click "Continue"
6. 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. 

[jmafisher]

I had this error when submitting my taxes on 4/12.  It evidently duplicated the RMD amount from one of my retirement accounts and even though I clicked the box that said I had no more RMD's it still calcualated a penalty.  

I then went back in and amended the return.  I deleted the 401k they secretly duplicated and re-downloaded it and it did the correct calculation.  I called TT help and they told me it was my problem, not their software.  I love it when a company blames their customers for problems.  

I've used TT for years, and will now be looking for an altrnative software product that calculates correctly, doesn't duplicate RMD amounts and doesn't blame their customers for the software bugs.