Pension Required Minimum Distribution

[GaillLee]

I have been receiving a monthly pension payment from my deceased husband's account since 2013.  It is not an IRA.  I have been receiving a monthly pension payment from my own retirement account since 2014, also not an IRA.

My Pension service for my pension does not keep track of the Required Minimum Distribution amount.  They told me to "contact my tax preparer".  I turned 70 1/2 this year.

Do I need to worry if I do not know what, if any RMD is included in the monthly payments for either account?

[BillM223]

Yes, you need to worry, as the penalty for not taking RMDs is severe (50% of the shortfall).

Here is the IRS FAQ on RMDs.

Note that the first section is about tax law changes affecting RMDs that were very recently passed. Even many websites may not be updated for this.

Note that if your late husband had "basis" in his pension (after-tax contributions that he made while he was employed), that you should tell TurboTax about this while entering the 1099-R information - otherwise you may be paying too much tax.

Although TurboTax is primarily designed for the do-it-yourself taxpayer, you may find the ability to speak to a CPA or Enrolled Agent on the phone to be advantageous, especially in this first year. Please see TurboTax Live and How it works, to see if you would want to add this service to your selection.

[Lisa3588]

You do not indicate what the employer plan is.  If the plan is a defined benefit pension plan and you are received periodic payments (usually monthly) over your life expectancy, the payments are considered as satisfying the RMD requirements.

[KRD]

The advice for pensions is incorrect and people are being given bad advice.   You need to take a RMD out of your 401K or other retirement savings accounts past 70 1/2.  I do NOT need to take RMD out of my  pension fund where I get regular payments.  (This may have to do with the IRA/SEP/SIMPLE box not being checked).   Turbo Tax gets so far that then it starts treating my 1099R for my pension like my retirement savings asking questions like "was this withdrawal an RMD for 2019"   Then it says under the answer for: "No none of this withdrawal was an RMD.   (This is not common)"  There words not mine.

Yes it is very common for a pension.  The next page gives you 2 choices 1- moved it etc. or 2 Did something else with it (cashed out, etc.)  I didn't "cash it out".  It was pension payments which continue until I die.  But this was the best of the two.  And why does it then ask about Disaster payments?  This section of Turbo Tax needs work.

[yesac2019]

So what should I put?  (Mine is a Teacher's Retirement System pension of Georgia) Should I click  "No, this was not a RMD withdrawal"???   Also should I click "Something else (cashed out)?

It's very confusing!!

[DaveF1006]

if you are over 70 1/2 in 2019, you are required to take RMD.  if this is the case, some or all of the distribution is a RMD.  You may check in your paperwork or disclosure statement sent to you that might list the RMD amount you were expected to take if you were over 70 1/2.

[Gaildance]

I am very confused about this.  The question that a withdrawal from a regular pension fund is an RMD was never asked before by Turbo Tax and I couldn't find a way to get out of it except to say "Yes. some or all of this withdrawal was an RMD".   

Is the IRS interpreting this in a new way or is it a glitch in Turbo Tax.  It also raises a question....If I am receiving my full pension payments each month, then can I couple the total annual pension amount with my IRA total, calculate the RMD for the year and attribute the full monthly withdrawal towards the RMD to satisfy the government?  If so, I would not need to deplete my IRAs so fast.  

[MaryK4]

Unfortunately, the RMD distribution has to be separate for IRAs, and other types of retirement accounts- you can withdraw from one IRA to satisfy the RMD from multiplt IRA accounts, but not pensions etc.  

Per the IRS "An IRA owner must calculate the RMD separately for each IRA that he or she owns, but can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts.

However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans have to be taken separately from each of those plan accounts."

@Gaildance

[macuser_22]

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@Gaildance wrote:

I am very confused about this.  The question that a withdrawal from a regular pension fund is an RMD was never asked before by Turbo Tax and I couldn't find a way to get out of it except to say "Yes. some or all of this withdrawal was an RMD".   

Is the IRS interpreting this in a new way or is it a glitch in Turbo Tax.  It also raises a question....If I am receiving my full pension payments each month, then can I couple the total annual pension amount with my IRA total, calculate the RMD for the year and attribute the full monthly withdrawal towards the RMD to satisfy the government?  If so, I would not need to deplete my IRAs so fast.  

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The question has been asked the same way for MANY years if your age is 70 1/2 or older for ANY 1099-R.

Virtually all pension plans, defined contribution plans, and annuities in existence today fall under section 401 of the tax code.

Required minimum distributions for defined benefit plans and annuity contracts all require RMD's after age 70 1/2.  If you receive periodic (monthly) payments from any pension plan you can be assured that the custodian of the plan is meeting the requirements so you can safely answer "yes" to the question.

The rules that the plan administrator must use to calculate the RMD as required by §401(a)(9) are defined in § 1.401(a)(9)-6) of the Internal Revenue Code (IRC).

The answer to the question does not go on your tax return, it is simply to make sure you do not owe any penalty for not taking the RMD or use it for an ineligible rollover.

The question is just to be sure that the requirement was met.

https://ttlc.intuit.com/replies/3302117

[peggynanfito]

I receive a monthly amount from my pension not sure about the RMD.I take it all the live on?not sure how to answer the question on how much is for RMD??????

[DoninGA]

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@peggynanfito wrote:

I receive a monthly amount from my pension not sure about the RMD.I take it all the live on?not sure how to answer the question on how much is for RMD??????

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Income received from a pension and reported to you on a Form 1099-R is all an RMD.