Question

RMD + City Pension

Forum|Forum|3 years ago
February 13, 2023
3 replies
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When entering our city pensions, TT asks if the "withdrawal" was an RMD? Then it asks how much of it was RMD. I have a private retirement account, and that fund contacts us and we determine how much to take out each year to meet minimums. However, one does not dictate to the city or state regarding city/state "pensions". Nor does the city/state pension administrator contact us to select how much we want to take out to meet minimums. We don't have a say in that. Is TT not aware that pensions from city/state are run by pension administrators, and we have no communication with them about our pensions and RMD.? Nor are we told how much of our pension is RMD. TT needs to rethink and rework this question, as we are not sure what the answers are, nor do we need issues with the IRS.

R

robtm

Employee

A pension does not require an RMD. An RMD is required only from an IRA if you are 72 or older. you should answer 0 to the question.

L

LB641Author

You say answer "NO" to the RMD, and then "0" for the amount? Yet others are saying YES and ALL. This is a City pension where we have no control over. Even the city folks seem confused as to the question, and how to answer. Sounds like this can get us in hot water with the IRS for a wrong answer.

SteamTrain

Employee

Once you reach age 72, the RMD question is asked about every 1099-R form that is entered.

For pensions, where you have no control over the $$ amount sent, you just indicate that it was an RMD, and that all of it was an RMD.

________

Why can't TTX bypass that for fixed pensions/annuities?

There is no easy way for the software to detect that situation. The standard 1099-R is also used for other non-IRA retirement account distributions, like a 401k/TSP funds....where the user does have to make sure they get the appropriate RMD amount.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

L

LB641Author

Here is what just one other post/answer says. And it adds confusion..... Not all pension or 1099-R's are RMD.

Virtually all pension plans in existence today fall under section 401 of the tax code and they all require RMD's after age 70 1/2. The question in TurboTax is just to be sure that the requirement was met. If you receive periodic (monthly) payments from any pension plan you can be assured that the custodian of the plan is meeting the requirements so you can safely answer "yes" to the question.

Are pension plans considered an rmd? The pension plan as an RMD, No. The income form a pension/retirement plan if you are age 70 1/2 or older, Yes all the pension/retirement income is an RMD. Say all of it is the RMD. If you are 70 1/2 it will ask you if it is the RMD. Say yes. Anything your pension pays you is considered to be the RMD. Traditional pensions automatically fulfill the rules of an RMD.

Say all of it is the RMD. If you are 70 1/2 it will ask you if it is the RMD. Say yes. Anything your pension pays you is considered to be the RMD. Traditional pensions automatically fulfill the rules of an RMD.

So is it NO and 0. Or yes and ALL.

SteamTrain

Employee

@dmertz You want to comment on this?

OR let all these folks thrash it endlessly?

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

D

dmertz

Employee

This question being posed by TurboTax has nothing to do with ensuring that any distribution requirement was met. What TurboTax is really asking in a roundabout way is how much of the distribution is ineligible for rollover. Pension distributions made periodically are generally not eligible for rollover, so are considered in this context to be entirely RMDs. Because the only reason that TurboTax asks the question is to determine how much is eligible for rollover, if you didn't roll any of the distribution over, it doesn't matter what answer you give.

L

LB641Author

he attorney is correct. The reason for an RMD (Required Minimum Distribution) is that the IRS wants to get the taxes that have accumulated in the money saved in 401-K's, IRA's and other retirement vehicles. Pensions do not have a pool of money that is designated specifically for you. Pensions end when you pass, (some plans allow for a spouses continued benefit at a reduced rate). There is no accumulation of wealth for the IRS to tax. So, if you have a pension, you do not have to be concerned about RMDs.

Buy we do have to answer the IRS tax questions truthfully and accurately. So what is the correct, since TT has the section screwed up. Is it YES, which is inaccurate in this case, or NO, and deal with issues and more questions. A little TT help would be appreciated.