Turbo Tax Question about Inherited Traditional IRA

[Cris]

My two sisters and I inherited a traditional IRA from our cousin who died earlier in 2021.  She was born in 1944 and already taking her RMDs.  Since she died early in 2021 she did not take her RMD for 2021.  We contacted her Financial Advisor and she gave us the total RMD amount for 2021.  It was approximately $12,000.  So since my two sisters and I received equal amounts of inheritance from this traditional IRA we each took one third ($4,000) of the total RMD for 2021.

My questions relate to the specific questions asked within TurboTax Premier.  I answered the questions as follows:

• Was this withdrawal an RMD – YES
• Tell us how much of the $4,000 I received  applies to the RMD that needed to be taken out – All of this distribution was an RMD

Next Screen…

• Tell Us More About This Retirement Plan Distribution

• I needed to take an RMD or be subject to a 50% tax….
• If you didn’t take the full RMD, we’ll help you request a waiver of the tax
• Include needed required withdrawals from any inherited retirement accounts in your answer below

Select one of the following:

_X_  I received all the RMD for 2021

__ I did not receive all the RMD for 2021

__ I was not required to take an RMD for 2021

Question – should I treat my portion of the RMD (the $4,000) as “All the RMD” OR should I look at “All the RMD” as the $12,000 and select “I did not receive all the RMD for 2021”?  I look at this as my responsibility is $4,000, not $12,000 and therefore “All” refers to the $4,000.   Please advise.

[DianeW777 · Accepted solution]

Question – should I treat my portion of the RMD (the $4,000) as “All the RMD” OR should I look at “All the RMD” as the $12,000 and select “I did not receive all the RMD for 2021”?  I look at this as my responsibility is $4,000, not $12,000 and therefore “All” refers to the $4,000.   Please advise.

Yes, answer each question about your income only, the $4,000.  Each question you should assume that $4,000 is your reported amount and answer all questions as if that was the only amount distributed

[Cris]

Thank you Diane for your very clear and understandable answer.  Also, just a suggestion for Intuit, could they put your comment right on the screen something like, "Answer this question for your income only (your portion of the RMD should be considered "All" if more than one person inherited a traditional IRA and you are each withdrawing your portion of the decedent's RMD.)"    

[Cris]

A follow-on question to my earlier submission.

In addition to the $4,000 RMD mentioned earlier, I inherited a 2nd generation IRA from my cousin (Suzy) who died in 2021.  This was a traditional IRA that Suzy inherited from her mom (my Aunt Eleanor).  My portion of the inheritance came to $3,500 total.  I decided to cash it out and close the account (versus roll it over) and received the total distribution of $3,500.  (NOTE: the $4000 was from Brokerage Firm A and the $3500 was from Brokerage Firm B) In regards to the $3,500 TT asks for the person I inherited the money from.  I put Suzy.  TT asks me if this was an RMD.  I don't believe I had to take an RMD so at first I said "No, it was not an RMD".  But when I said "no" it seemed to change my answer to the $4,000 RMD which is Suzy's RMD for 2021 that I have to take or pay the 50% penalty.  It appears that TT sees the name "Suzy" and assumes the RMD answer is the same for both accounts.  In other words I cannot say, "Yes, it is an RMD" for the $4,000 RMD AND "No, it is not an RMD" for the $3,500 total distribution.  How do I resolve this?  At this point I have just said "Yes, it is an RMD" for the $4,000 and "Yes, it is an RMD" for the $3,500 total distribution.  Please advise!