Entering RMD for each 1099R

[rosm2004]

I just learned today that I was supposed to take an RMD for 2022 from one of my retirement accounts and had not taken anything out of that last year. However, I did take a distribution from another account, but not enough to make up the RMD I didn't take. I also learned that some accounts, such as pensions and annuities, are not subject to RMD.

Anyway, for each 1099R, Turbotax assumes that all accounts are subject to the RMD and asks the question about whether all or some of the distribution went towards the RMD. If I say NO (for pension/annuity accounts), it changes the answer to NO for all the other 1099Rs. When I say YES for the account that was subject to the RMD, it changes all answers to YES. Why is it doing this? Should I just say YES to all or am I doing something wrong?

[DoninGA]

If you are age 72 or older then any pension or annuity that you receive is an RMD.

[rosm2004]

Well, that seems to be one interpretation, which makes sense to me because, by default, they pay you a fixed amount, which I assume has to be at least the minimum amount, but all the financial institutions that I talked to today say it's not an RMD.

But, anyway, I'm just going to say yes to all because it seems Turbotax won't let me say yes to some and no to others anyway!

Thanks.

[Mike9241]

different type of plans, different RMD starting dates.  FROM AARP

What type of retirement accounts require RMDs?
Traditional IRAs
Simplified Employee Pension (SEP) IRAs
Savings Incentive Match Plan for Employees (SIMPLE) IRAs
401(k)s
Nonprofit 403(b) plans
Government 457 plans
Profit-sharing plans
Other defined contribution plans

IRS PUBLICATIONS

RMDs from employer plans (other than SEP-IRA for self-employed, SEP-IRA for employees and SIMPLE IRAs) generally must begin by April 1 of the year following the year the individual reaches age 72 or later if the plan provides that employees working past this age can start when they retire. this special rule doe not apply to more-than-5% owners 

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a distribution that is not an RMD can not be used to satisfy say an IRA RMD requirement for the year. Any missed RMD amount can be subject to a 50% penalty)

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 You cannot take the RMD for one type of account from a different type of account. You cannot take an employer plan RMD from an IRA or vice versa. An RMD must be taken from each employer plan that you might have. If you have two 401(k)s and a 403(b), you must take 3 separate distributions – one from each 401(k) and one from the 403(b). There is an exception for 403(b) plans. If you have more than one 403(b), you can calculate each RMD and then combine them and take them from any 403(b) account you have.

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annuities  - a different animal unless held inside an IRA

see this link about RMD's for annuities

https://www.annuityexpertadvice.com/annuity-rmd/#:~:text=No%2C%20non-qualified%20annuities%20are%20n... 

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saying yes that a distribution is an RMD when it isn't would probably allow you to improperly avoid the 50% penalty for failure to take an RMD.  I can not explain the answer you got unless what they were saying was it was not an RMD for IRA RMD purposes. 

[fanfare]

for pensions your payout is to be considered RMD for purposes of TurboTax questions, which are confusing.

a pension is not an IRA.

for IRAs, you have to add the value of all accounts that are Traditional IRAs and calculate the RMD on that amount.

a 401k is not an IRA.

you have a separate RMD on each 401k account that belongs to you.

@rosm2004 

[rosm2004]

Fanfare,

Thank you for the simple explanation that a 401K is not an IRA. I think that means that the RMD from my thrift savings plan and my IRA are separate and distributions over the RMD from one cannot go towards the RMD of the other. Is that correct?

However, my question was also about Turbotax functionality. However I answer the question asking whether the distribution was an RMD for one 1099R, it applies to all the other 1099R's as well. So, it seems I have to answer YES to all, even though some aren't.

[rosm2004]

Thank you for the detailed explanation, Mike. 

This is so confusing, which is probably why I'm getting so much conflicting advice from each of the account advisers I've been talking to. Of course, they all caveat their advise by saying they aren't a tax specialist. 

I'm just going to play itself by taking the RMD on any account where I have one and answering YES to the question about whether or not it's an RMD (can't answer NO anyway because Turbotax sets the answer to NO for all accounts).

[fanfare]

for traditional IRAs, as long as the amount distributed in any way is at least the RMD for your IRA(s) total.

it doesn't matter how you answer the question.

TurboTax just want to check that you did not rollover an RMD; that is not allowed;

--

each 401k is treated individually.

@rosm2004 

[JBERNARDM]

I HAVE NOT EXPERIENCED THIS ISSUE WITH BLANKET CHARACTERIZATION OF ACCOUNTS SUBJECT TO RMD AS AN ACROSS THE BOARD FINDING.  NOT SURE HOW THIS HAPPENS TO YOU OR WHAT MAY HAVE PROPMPTED IT, BUT YOU CAN OVERRIDE WHATEVER NUMBER TURBO MIGHT SUGGEST (IF THEY EVEN DO SUGGEST ONE)

JUST SAY YES FOR ALL, BUT DO YOUR OWN CALC FOR RMD.  YOU'LL NEED TWO BITS OF INFO...TOTAL VALUE OF ALL IRA ACCOUNTS IN YOUR NAME AS OF 12/31/2021 (FOR TAX YEAR 2022) , AND THE NUMBERS OF YEARS OF YOUR LIFE EXPECTANCY (LE) , FROM THE IRS TAX TABLE FOR RMD.  DIVIDING THE AGGREGATE AMOUNT OF IRA ACCOUNTS BY THAT NUMBER FROM LIFE EXPECTANCY TABLE WILL YIELD YOUR RMD

TURBO TAX ASSUMES ALL 1099-R INCOME IS SUBJECT TO RMD, EVEN ANNUITIES OUTSIDE OF QUALIFIED PLANS, SO YOU HAVE TO BE A BIT MORE ON THE BALL.  THE CALCULATION IS ANNUAL, AND SINCE YOUR LE CHANGES AND LIKELY YOUR ACCOUNT BALANCES AS WELL, YOUR RMD WILL CHANGE ANNUALLY.

[JBERNARDM]

Not entirely accurate.. Accounts that contribute to the aggregate amount of assets subject to RMD include the following: (copies straight from the IRS pub)

• raditional IRAs
• SEP IRAs
• SIMPLE IRAs
• 401(k) plans
• 403(b) plans
• 457(b) plans
• profit sharing plans
• other defined contribution plans
• Roth IRA beneficiaries

these are each considered defined contribution plans.

What is NOT included are pensions (defined benefit plans).  What also is not included are annuities fund with after-tax dollars (non-qualified). 

[DoninGA]

@JBERNARDM Please note this IRS website Q&A - https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs

Q15. How are RMDs determined in a Defined Benefit Plan? (updated March 14, 2023)

A defined benefit plan generally must make RMDs by distributing the participant's entire interest in periodic annuity payments as calculated by the plan's formula for:

• the participant's life,
• the joint lives of the participant and beneficiary, or
• a "period certain" (see Treas. Reg. §1.401(a)(9)-6, A-3).

[taxlady28]

Be very careful.  Check with the financial institution and see if you met RMD for each plan.  If you did not and the IRS catches it the penalty is 50% of what the RMD was.  When you are at retirement age, it is smart to have RMD automatically deducted each year.  If for example, your RMD is $5000, the penalty for missing it would be $2500.  

Contact your financial institution.  If you did not meet the requirement get it taken care of now.  File a form 5329 and ask for forgiveness of the penalty.  The IRS may waive all or part of the penalty.  Computers are catching more and more things like this.  Don't let it slide.  Get it resolved.

[rosm2004]

Yes, thank you. My advisor on the IRA, whom I had just talked to a few weeks ago, had told me about this year's RMD but failed to advise of last year's and I missed the April 1 deadline. Once I found out, completely by accident because I had called to ask about another issue, I made the RMD withdrawal.  Turbotax does actually ask a question to report this situation and automatically provides the waiver form, which is nice.

However, I did receive a distribution from my employee Thrift Savings Plan distributed that was greater than the RMD for that plan. Now, I can't figure out whether the additional amount counts towards the RMD for the IRA account. I don't think it matters at this point because I have now withdrawn the RMD for both accounts, but it's very confusing because I don't know if the RMDs from the TSP and IRA can be combined - and the phone rep for the TSP was absolutely useless - she not only was unable to tell me my 2022 RMD (she actually told me I should have called her before the end of last year), but she also gave me the WRONG RMD for 2023 (I later found a written letter among my papers stating the 2023 RMD but couldn't find the same letter for 2022) - it was off by thousands of dollars! I haven't been able to get to my TSP on line because they required me to make a new sign on - and to do that I had to request a PIN, which they send in the mail, not email. I didn't get to it immediately when I received it and when I tried again a few weeks' later they told me the PIN had expired! 🙄 Oh well, if these are the worst of my problems (and I hope they remain the worst), I'm doing all right.

[fanfare · Accepted solution]

For each 401k (if you have more than one) the RMD must be calculated for and taken from that account.

For IRAs, add the total value of all accounts (Traditional, SIMPLE, SEP), the RMD can be taken from any one account or account(s) as you wish.

If your traditional IRA is an individual retirement annuity,
special rules apply to figuring the required minimum distribution.

for a pension , TurboTax asks the confusing question. Answer YES.

@rosm2004 

For tax year N, the RMD is calculated based on the previous year's Dec 31 value

[taxlady28]

You cannot combine plans to make RMD.  Each plan is stand alone.  I am so happy that you have taken care of this and that TurboTax has prepared the form.  I did not know that would happen and thought you would have to do that manually.