What is Tax on excess accumulations in retirement account?

Forum|Forum|1 year ago
January 25, 2025
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What is excess accumulations in retirement account?

DianeW777

Excess accumulations occur when you have contributed more than you are allowed in a given tax year to your retirement account. The earnings on that excess contribution would accumulate interest. This is what is referred to as 'excess accumulations' in any retirement account.

Excess accumulations can also occur if you have not taken your required minimum distributions (RMD). TurboTax will generate a Form 5329, if this is the case. Once you complete the 1099-R and answer the questions you can preview your return.

For TurboTax Desktop simply switch to Forms. In TurboTax Online/Mobile you can use the instructions below to preview your return.

Using the Tax Tools (left panel):

To find Tools:
- Sign into your TurboTax account and open or continue your return.
- Select Tax Tools in the left menu.
- You'll find Tools beneath Tax Tools.
- Select View Tax Summary
- Select Preview My 1040 (left panel)
  - Check Form 1040, line 23.

@rbaierwa

[Edited: 01/25/2024 | 9:42 AM PST]

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rbaierwaAuthor

Thank you so much DianeW777: Excess accumulations occur when you have contributed more than you are allowed in a given tax year to your retirement account. The earnings on that excess contribution would accumulate interest. This is what is referred to as 'excess accumulations' in any retirement account.

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I did not make any contributions to my IRAs in 2024, in fact no contributions to IRAs since 2014 yet Turbo Tax shows tax on excess accumulations for a significant amount. I don't know where they are getting this info from and T. Tax does not offer a way to analyze this and find out where it came from.

VolvoGirl

Employee

It could also be if you got a 1099R for your RMD Distribution and Turbo Tax thinks you didn't take out the full RMD amount. Did you get more than 1 1099R?

rbaierwaAuthor

Thank you Volvo Girl. BTW, I worked for Volvo for 24 years before retiring.

I did get 2 1099-Rs and the amounts on both exceed the MRD for 2024.

VolvoGirl

Employee

But it probably thinks one of the 1099R didn't take enough RMD out. Turbo Tax changed this year. When it asks about the RMD it is only asking for that one 1099R. You need to enter the amount in box 1 on that 1099R for the RMD, not the total RMD for both.