IRA Withdrawal Ignored if no RMD

[plpollack]

I am using TTax Deluxe Windows.

I have several IRA's. One of them, call it A, was moved by my financial advisor to a different settlement company, call it B, during 2025. I took RMD from A and later from B during 2025.

The odd situation: B had no RMD required for 2025 because there was no B in 2024.

The error: TTax ignores the RMD I took from B during 2025, calculating a form 5329 penalty.

My Workaround: I said B had an RMD of $1, and A had an RMD $1 less than it really did.

This version generated NO penalty. I of course do not want to file it this way, but will have to if TTax is not fixed.

[RogerD1]

Based on your post, it sounds like you transferred ("rolled over") an IRA from custodian A to custodian B.  Since the RMD for 2025 is based on the year end value from custodian A on 12/31/24, then the total withdrawals from both A and B added together need to equal the RMD as calculated from the 2024 year end value of A to avoid a penalty for not removing at least the RMD amount.

Let's say that your RMD for A was $10,000, and you took out $6,000 from when it was "A" and $4,000 from when it was "B", when you report these in Turbo Tax, you would say that the RMD for A was $6,000 and the RMD for B was $4,000.

As another example, let's say your RMD for A was $10,000, but you only took out $6,000 from "A" and $3,000 from B.  Since you did not satisfy the RMD, you could report the RMD for A at $6,000 and the RMD for B at $3,000 in TurboTax to arrive at an insufficient RMD withdrawal of $1,000.

If you have multiple IRA accounts, the sum total value of all of the accounts is used to calculate RMD.  You also do not need to take money out of each individual IRA.  For example, If you have 2 IRA accounts subject to RMD, you determine your total RMD withdrawal for 2025 based on the 2024 year end value of the accounts, but you are able to only take that calculated RMD out of only one of the accounts and still satisfy the RMD.

[plpollack]

@RogerD1 

Quoting you: Let's say that your RMD for A was $10,000, and you took out $6,000 from when it was "A" and $4,000 from when it was "B", when you report these in Turbo Tax, you would say that the RMD for A was $6,000 and the RMD for B was $4,000.

You are correct in the premise.  My current workaround is to say that B's RMD is $1 (it is really zero), and A's is $1 less than it actually is.

You are suggesting that I say each's RMD is just what I took from it.  That also works.

Do you agree your solution is the same as mine with just the number slippage differing in amount?

Thanks.

[RogerD1]

Yes, your way also works as long as the total RMD is reported correctly.  The individual withdrawals do not get reported on the return, but the main thing is to make sure that the RMD is satisfied.  The year end value of all your IRA amounts get reported to the IRS on Form 5498 each year and they would be able to determine the RMD required for you and if you have satisfied it.

[DavidD66]

It doesn't matter how you get there.  The RMD information isn't reported on your tax return unless you indicate that you did not meet your Required Minimum Distribution.   So if you met your RMD and the information you input into TurboTax doesn't result in the program thinking you did not meet it, then all is well and good.  

[plpollack]

@RogerD1

@DavidD66

Thanks to you both.

Still, seems like a simple fix for Turbo Tax, but they never report fixes, so I'll eventually try it again perfectly correct and see.

[plpollack]

@RogerD1

@DavidD66

I have just re-tested my unusual RMD situation, and the Turbo Tax bug has NOT YET BEEN FIXED.

Reviewing Situation:

I took part of my 2025 RMD from a fund (call it B) that officially had a ZERO RMD requirement because it did not exist at the end of 2024.  The account was created in 2025 due to being transferred from Pershing (call it A) (I mistakenly said Raymond James above - no matter) to Schwab.  In TTax, I specified RMD requirement for account B as ZERO.

Since I took part of my RMD from account A in 2025 before the transfer, I had a place in TTax to enter the account's RMD requirement, so my total RMD requirement was correctly entered.

TTax hits me with a penalty.

Work-around fixes the problem: I am claiming a $1 RMD requirement for account B and reducing account A's by $1.

Therefore, my RMD requirement is correct and my RMD withdrawals are correct.