Question

Tax Year 2020 - Put back of RMD taken early in the year.

Forum|Forum|5 years ago
January 23, 2021
1 reply
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The Stimulus bill passed in late March of 2020 included tax relief for retirees. Required Minimum Distributions (RMDs) were suspended for the year 2020. If you had taken money out of your IRA account earlier in the year, you were allowed to return the money back to the original plan you took the cash from to avoid paying any taxes on it. You had to return the money by 8/31/20.

That is my situation. I took $10,000 out in January of 2020 and then put the $10,000 back into the same account in early August of 2020. Fidelity handled the transaction to ensure the put back of the cash was coded correctly. They said the return of funds would be shown as a “IRA contribution” on Form 5498 and would be a deduction to taxable income since the original withdrawal of the $10,000 would show up as taxable income on Form 1099-R. And that agrees to the tax forms I recently received from Fidelity. The $10,000 is part of the taxable income shown on 1099-R and Form 5498 shows rollover contributions of $10,000 on line 1 of that form.

Here is my problem with entering this into TurboTax. First some information on me. I’m 74 and have income from pensions and social security. And, in a normal year, take my RMD as required. I do not have any “earned income”. Also, the $10,000 was taken out of and put back into an IRA Rollover account, not a Traditional IRA account.

So, in TurboTax, I go to “Retirement and Investments” and then into “Traditional and Roth IRA Contributions”. The first page has you indicate if this is a contribution to a “Traditional IRA”, a “ROTH IRA” or “None of the Above”. Since, in my case, this is a contribution to an IRA Rollover account, I check “None of the Above”. No luck. Doing that immediately backs you out of the input screens.

Since that didn’t work, I thought I would try to fool the system and indicate the $10,000 was a contribution to a Traditional IRA. Many screens later, TurboTax finally tells me that my IRA contribution is not permitted because I do not have any earned income. In fact, TurboTax tells me I have made an “Excess Contribution” and will owe a 6% penalty of $600 on it.

So how and where do I enter this $10,000 contribution to an IRA rollover account in TurboTax?

Thanks for your help.

Tom

TurboTax Home & Biz Windows

T

Thomas SAuthor

OK, this is Thomas S.

TurboTax has informed me that this situation is going to be handled on IRS Tax Form 8915. That form will not be available until 02/18/21 at the earliest. The IRS must be revising the form to handle the special situations that occurred in 2020 due to suspension and, in some cases, repayment of RMDs. Hope this information helps others in this situation.

macuser_22

Employee

First, a return of the RMD is a *rollover* and NOT an IRA contribution. Nothing goes in the IRA contribution section at all.

Second, you enter the 1099-R and if the RMD question comes up, you MUST check the box that says "No, none of this withdrawal was a RMD" which it wasn't since there was no RMD inn 2020.

Then answer the rollover questions.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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Thomas SAuthor

Champ,

I think you have put me on the right track. Mine return is a bit more complicated though since the taxable income shown on the my 1099-R is made up of two components. One component is the return of the $10,000 IRA withdrawal I had taken earlier in the year and the other piece is the amount of ROTH conversions I chose to do in 2020. When I try to input all this on the TurboTax screens you have so kindly shown in your reply, the TurboTax software says I need two 1099-Rs to report all these transactions. It recommends that I manually split my original 1099-R from Fidelity into two 1099-Rs for input purposes. I can easily do this. Just hope the IRS follows what I'm doing. And I really wonder why TurboTax support said this would have to be reported on Form 8915.

Anyway I want to thank you for your informative reply. I think your answer points people in the proper direction for reporting this kind of transaction.

Tom