Why does TurboTax ask for RMD for a pension?

[ColonelB]

Thanks for responding.  I used to be a beta tester for TT until they farmed it out to some 3rd party.  After the beta test, I was still finding flaws in it.  But I will continue using it, and I hope TT will make some instruction improvements to cut down on the number of questions loyal customers have.

[ColonelB]

Your last sentence provided just the answer I hoped for and should clear up the issue.  Thanks.

[michohio]

I summarize value end of year for my IRA's. I can calculate RMD withdrawls from that for the next year. No problem.

PROBLEM: However, I also receive a monthly pension from my former employer after retirement.  It does not have an end of year balance.  I just receive monthly payments.  So there is nothing about this pension that I can add to the end of year total used to calculate RMD.  So DO I JUST USE MY IRA TOTALS TO CALCULATE RMD?  Or do I need to do something special about the pension income?

Related question:  I've heard that I SHOULD include my pension income, in addition to my IRA withdrawls, to all count towards the RMD requirement.  Is this correct?

[VolvoGirl]

You don't have to calculate a RMD for a pension.   As I said above....

Anything your pension pays you is considered to be the RMD. Traditional pensions automatically fulfill the rules of an RMD.

 I've heard that I SHOULD include my pension income, in addition to my IRA withdrawls, to all count towards the RMD requirement.  Is this correct?  NO.  You have to calculate the IRA RMD separately and 401k plans separately.  And not for Pensions.  

See  IRA pub 590B for IRA Distributions
https://www.irs.gov/pub/irs-pdf/p590b.pdf

[Mike0749]

For Pensions you always answer "Yes" to RMD question. 

[wm5456]

No, it is not working correctly, I answered all the questions correctly.  It still insists I should have an RMD.  Can't get by it in Turbo, going to try another tax App that knows how to handle pensions correctly.

[wm5456]

This issue is definitely a Turbo Tax problem that could be fixed by them by asking if the pension was a defined plan.  However, they never fix anything, so it is best to figure out a work around yourself.  I answered yes and put the yearly amount in as the RMD because it had been pulled out of the defined plan each month by my employer and paid to me.  I pay estimated taxes each quarter to cover the taxes on my pension and social security.  I usually overpay federal and state each year with my estimated taxes each quarter.  IRS is happy because they get their taxes in some form.        

[wm5456]

After reading through all these threads, I understand that YES is the correct, but questionable, answer.   Such an easy fix for Turbo Tax.  I have moved on, hopefully I will remember this discussion next year. 

[wwrick]

I am pretty sure you are wrong.  This is a new bug in Turbotax 2024.  I have been filing 1099-Rs for pension income for years and no previous version did this.  The concept of RMD does not apply to a pension.  There is no account balance and there is no RMD.  The plan defines the benefit as a number paid in most cases monthly.  To repeat: this is a new bug in TT2024.

[DoninGA]

---

@wwrick wrote:

I am pretty sure you are wrong.  This is a new bug in Turbotax 2024.  I have been filing 1099-Rs for pension income for years and no previous version did this.  The concept of RMD does not apply to a pension.  There is no account balance and there is no RMD.  The plan defines the benefit as a number paid in most cases monthly.  To repeat: this is a new bug in TT2024.

---

Ever since 2019 when I turned 70 1/2 the TurboTax program would ask about an RMD from my pension payment.  All of the pension is an RMD.

You must have turned age 70 1/2 in 2024.  All of your pension is an RMD.

[wwrick]

I have been filing tax returns using TT for a long time.  My returns have included my pension for the last 22 years.  TT has neve in that time asked me to treat the pension as an RMD until 2024.

I followed the workaround and answered that my pension was an RMD, then had to fill out the RMD Excess Accumulation Worksheet.  I typed in the pension amount and the pink went away.

Repeating: for 21 years, my pension was not an RMD in TT.  With TT2024, it is.

[wwrick]

nope, I turned 70 1/2 and started taking RMD from my investment accounts as required at that time.  My pension however started 22 years ago.  The pension plan has no RMD just a commitment to keep sending those monthly checks.  If the Plan should fail and not be able to make the payments, ERISA takes over the payments up to their limits.  As it happens, I and most of my fellow retirees believe our Plan purchases an annuity for each person as they retire so ERISA has no exposure.

[BillK]

This year, TT has changed the handling of RMDs for pensions.  They still ask if you took out your RMD from the pension.  You need to answer YES to move on.  Then they ask how much you took out.  I answered 0 (zero) and TT accepted that.  During the Review, they didn't complain about this response. 

[AmyC]

The IRS gets all account balances as of Dec 31. The RMD rules and ages have shifted and the IRS is updating software and processes. Any pension from anywhere, automatically includes the RMD. Any annuity automatically includes the RMD.

The laws for inherited IRAs changed in the recent past. It has all come together for the program to be asking more questions.

@wwrick

[jimonqa]

Thanks for the common sense answer.  I have a further complication in that the 1099-R for my pension has a blank 2a Taxable Amount field.  If I answer TT later and say another amount was used, it drives me to an annuity dialogue which isn't applicable.  So, I worked around by selecting 2a Taxable Amount being used to determine taxable amount, even though it was blank... resulting in really using Box 1a.