How to report annuity 1099-R income - how to answer RMD question?

Forum|Forum|4 years ago
March 2, 2022
2 replies
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1. I have to take RMDs from a couple of retirement accounts, but I also have qualified retirement annuity income from a couple of other accounts. It looks like there is no information on the 1099-R form that helps me tell which is RMD versus which is annuity distributions. It looks like the only way I can tell is by matching up the dollar amounts on the 1099-R with my RMD paperwork. Is this true?

2. If the 1099-R is for an annuity, how do I answer the "is this an RMD?" question from TurboTax? The Turbotax help does not explain this, and other question/answers on this site were either contradictory or unclear. I know that annuity income meets the RMD requirement, but it isn't obvious that the annuity income should be entered as an RMD in TurboTax. Can somebody please definitively answer this?

Thanks!

ColeenD3

If you receive monthly distributions, it's all an RMD once you reach age 72. It is the responsibility of the issuer to see to it that the requirements are met.

dekierasAuthor

Employee

I'm sorry, ColleenD3, but this really didn't answer my question. Technically maybe this is a "RMD" is some sense, but you're not supposed to have to be a tax expert to use TurboTax.

Correct me if I am wrong: I think the problem is that the TurboTax question is flawed - normally, an RMD payment is something you have to arrange and the IRS RMD table is relevant. But once you start receiving them, an annuity or pension payment is automatic and the IRS RMD table is irrelevant. I'm guessing that question should be something like "is this an RMD, annuity, or pension payment?" and the questions that next appear help clarify this.

My first question still - stands: is there no way to tell from the 1099-R whether a payment was a regular annuity or pension payment versus a one-time RMD?

mglauner

Correct, there is no way to tell from the 1099-R whether a distribution was a regular payment or contains RMD.

However, once you are 72, and the payor determines your RMD is 12K for the year, 1K of each monthly payment is RMD and the total distribution shown on the 1099-R contains the total required RMD of 12K, for example.

You can then safely report in TurboTax that your distribution was all RMD.

Nothing about that question goes on a tax return. The ONLY reason for the question is to determine if the distribution was eligible for rollover.

If the distribution is for your RMD for the year, it will be treated as a normal distribution. The code 7 will be marked in Box 7 on your Form 1099-R.

Click this link for more RMD Distributions.

dekierasAuthor

Employee

Here's my understanding that I gleaned from other replies to my question, elsewhere in this forum, and some additional reading.

FIrst, the IRS gets information from the retirement account company both about regular retirement plans and annuities. They can tell from this whether you took the required RMD or not. Immediate annuities, like the ones I have, do not involve the usual RMD process because the annuity payments are treated as automatically satisfying the RMD requirements for that retirement account. Again, the IRS has all this information. I don't have to say which 1099-R goes with annuity/pension vs. 403(b) etc because the IRS already knows.

So in other words, all of the 1099-Rs I got involve payments that go towards RMD requirements. So the correct answer to "is this an RMD?" is indeed, "yes". And the next set of questions from TurboTax clarifies the situation further. Finally, since the requirement income here is all taxed at the same ordinary income rate, for purposes of computing the tax, it doesn't matter which was pension, annuity, or 403(b) etc RMD distribution.

I do think the TurboTax question could have been more clear. But I'm good for now.

Thanks for your help, everyone!

AmyC

Employee

Great job! Yes, all RMD if payments are being made. Yes, the IRS knows what you need to be taking. Yes, ordinary income is all the same. The main issues usually are someone forgot an annual distribution so they did not take enough or somebody took money out too young or a disaster happened.

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