My mother has been withdrawing just 1/12 of her IRA MRD each month(e.g. $1,000). My mother passed away in April 2024 and had taken 4 monthly payments ($3,000 of the annual MRD amount of $12,000). The IRA named her 4 children as beneficiaries and the remaining amount in the IRA was distributed equally to her 4 children. When each of the children opened their own IRA account, their share of the remaining MRD for 2024 was distributed to them. So, the total MRD for my mother's IRA was taken in 2024 by either my mother or by the 4 children who inherited the IRA funds.
I've entered the amounts from my mother's 1099-R in Turbo-Tax. I was then asked to report what the MRD was as of December 31, 2024. The MRD shown to be taken is $3,000 while the MRD for all of 2024 is $12,000. This makes it appear as if the MRD was not taken, but it was taken in total, just by 5 different people.
How should I handle this? My mother's return currently shows penalty for not taking the MRD.
When preparing your mother's tax return, enter $3,000 as the required RMD, not $12,000. Upon her death she was no longer required to complete the rest of the RMD. That responsibility moved to the beneficiaries, which you say that the beneficiaries fulfilled.
The beneficiaries will each indicate in TurboTax when preparing their own tax returns that the amount that they were required to take was only their share actually taken, not the entire amount.
What happens if you just answer the question about total RMD taken as of 12/31/24 as $12,000? That is in fact what happened. Does the question specficially ask who paid the RMD?
Not really applicable in your case but the IRS in mid 2024 issued regulations saying that the year of death RMD can be made the later of the tax deadline filing date (typically April 15) OR the end of the year FOLLOWING the year of death. Perhaps Turbo tax has not been updated for these contingencies.
I don't see a specific question regarding what was taken other then where they ask for the MRD amount of the 1099-R distribution. You have a choice of the entire amount was MRD, some was MRD or none was MRD. IRS publications clearly show that a beneficiary can take MRD from the IRA but I see no way to report that.
How do I report MRD amounts taken by beneficiaries of an IRA in the year the IRA owner died? Currently TurboTax applies 25% penalty to the deceased person since they didnt' take all of the MRD, but the remaining amount was taken when the IRA was distributed to the beneficiaries in 2024.
When preparing your mother's tax return, enter $3,000 as the required RMD, not $12,000. Upon her death she was no longer required to complete the rest of the RMD. That responsibility moved to the beneficiaries, which you say that the beneficiaries fulfilled.
The beneficiaries will each indicate in TurboTax when preparing their own tax returns that the amount that they were required to take was only their share actually taken, not the entire amount.