TurboTax mistake with RMD

[neal6]

As best I can determine TT has erroneously computed a much larger RMD for my return than the numbers I gave to it explicitly in the step-by-step dialog.  I am using the desktop version of TT Premier. The result is a large penalty for not taking that larger RMD.  I know I took the correct RMD; have been doing it for years.  TT will not allow me to correct the larger RMD that appears in the Form 5329.  My situation is complicated by several facts:   The 1099s are all imported by TT from our brokerage firms.  Both my wife and I have two IRAs and they are at two different brokerage firms.   We file a joint return.  We also have ordinary pensions that are completely independent from any IRAs.  One of us took a small part of the RMD as a QCD, also reported on an imported 1099.  All the data imported by TT is correct, but the total RMD shown in Part IX of the 5329 form  for the person who took the QCD is incorrect -- much too large.  I have already spend a long time on the phone with the TT expert, who could not figure out how to correct the error.  ANY HELP APPRECIATED.  THANKS.

[Mike9241]

The taxpayer enters the RMD portion of the 1099-R, which can not exceed line 1. Each spouse must take their own RMD. One spouse cannot take less and the other more, so that the total for the two taxpayers equals the separate amounts required. 

If the RMD for one spouse was $80k but took $50K from one of their IRAs  (on line 1) and made a $20K QCD, the RMD would still be $50K on that 1099-R. They would have to take $30K from another of their IRAs to meet their RMD requirement.  On the second 1099-R, they would indicate an RMD no more than what's on line 1. 

If $80K was indicated as the RMD on the first 1099-R, TurboTax would think there was a deficiency of $30K  and produce a 5329 (even if the $30K was indicated as the RMD on their second 1099-R). 

[neal6]

Mike, Thanks for the response, but that is NOT the explanation.  I will try to restate the situation more clearly:  My wife and I each have 2 different IRAs at 2 different brokerage firms.  I looked up the balances as of 12/31/2024, added my wife's separately from mine, and divided each total by the appropriate life expectancy from the IRS table, thus computing 2 different RMDs, one for each of us.  Those RMD amounts were then entered into the TT step-by-step dialog for each of us separately.  I then took two separate distributions from one of my IRAs and the other from one of my wife's IRAs.  Those distributions, taken in December 2025 were for just a little more than my wife's RMD from one of her IRAs, and $3000 less than the RMD for me, taken from one of my IRAs.  I had, earlier in the year taken a $3000 QCD from my other IRA account at a different brokerage firm.   The sum  of  my QCD and my  large December distribution added to a bit more than my RMD.   So that is 3 independent distributions from 3 different accounts for two different persons at two different brokerage firms.  TT imported all three 1099-Rs from the two different firms correctly, but nonetheless concluded that my  RMD should have been about $70,000 more than the amount I calculated and entered into the program.  I tried to track down the error in the forms using arithmetic, but could not find the problem.  I also reviewed the step-by-step dialog a few times and that looked OK.  Finally, I might add that I have used TT for years and have been taking RMDs for about a decade without problems.   As I said earlier the TT expert I spoke with on the phone for 2.5 hours could not figure it out  either.   Any advice appreciated, really.  Just keep in mind that I am  using TT desktop premier Windows.

[neal6]

Mike, Correction to previous post:

" I then took two separate distributions from one of my IRAs and the other from one of my wife's IRAs.  "

should have read

I then took one distribution from one of my IRAs and one from one of my wife's IRAs. 

Sorry for any confusion.

[neal6]

I posted this issue originally, and can report a work around.  I remain convinced that TurboTax made a mistake, and I hope someone at TT reads this and fixes whatever bug there is in the software;  it must affect many people.  The workaround I used was to use the list of 1099 and 1099-R entries in the step x step summary of all input for the different steps, delete the 1099-R entries for the RMDs for myself and wife, then enter those two back in manually, along with the information on the 12/31/2024 balances in all our IRAs.  The QCD can also be entered in manually, though I associated it with my account that was RMD'd rather than the different account I actually used for the QCD.    I would also remark that the imported 1099-R forms cannot themselves be deleted unless all the 1099's from that brokerage are also deleted;  therefore, I deleted them from the step x step summary.  This workaround fixed the problem.   Actually, I also use a CPA, and use TT as a check.  Will report back if my CPA produces a different return.

[Mizzscribe]

Same here with QCDs incorrectly entered on Form 5329. What I learned was that I made an incorrect interview response when asked if ALL the 2025 RMD was distributed. Because a portion were QCDs, I replied NO - mistake! It took two specialists and a couple hours to reach this conclusion. When the TT specialists were as lost as I was, how did I finally figure out what I had entered incorrectly?

Thank you, ChatGPT!

I returned to the interview, replied YES, and deleted Form 5329. The QCD issue is still confusing, but at least I was able to remove an inaccurate penalty for not taking the full RMD. 

[neal6]

Mizzscribe,

That was interesting.  I cannot remember what I answered YES/NO to that question, but recall it was puzzling.    As I said an "expert" from TT could not figure it out in nearly 2 hours.  What is even more puzzling is that one of the step by step questions asks explicitly for what your RMD was supposed to be, and what you took.  I answered that with the correct answers.  I hope TT fixes this issue.