Inherited Roth IRA from parent in 2014

Forum|Forum|1 year ago
March 3, 2025
2 replies
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I inherited a Roth IRA from my Dad in 2014 (he was 82) and have been taking the required RMD. This year Turbo tax is asking for the required RMD amount on a RMD Excess Accumulation Worksheet and when I enter the amount it lowers my tax refund. I thought distributions from a Roth were tax free.

Not A Product Question

AmyC

Employee

They are unless you don't take the full distribution required, then there is tax. Double check your answers and look at your forms to see why the penalty is being calculated. You want to look at all worksheets as well. Choose to see everything, not just forms.

To print or view your forms:

In desktop, switch to Forms Mode.
For online:
1. On the left side, select Tax Tools
2. Select Print center
3. Select Print, save or preview this year's return
4. If you have not paid, select pay now.

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benglebret

NO, it is an error in TurboTax and it has not been fixed despite me bringing it to the attention of IT two weeks ago. There is a box checked on the 1099-R worksheet that should not be checked. See my reply below. TurboTax decided that I have a code 2 or 5 in Box 7, which I do not. It is hard checked, and I cannot uncheck it. These number codes both result in a penalty. This prompts us to enter our RMD and it raises my taxes by a substantial amount. A standard Q in box 7 with no numbers should result in a tax free distribution of the inherited Roth. This is how it has been every year until this year when someone in IT did not understand a simple if-then statement. If the "if" doesn't apply, it doesn't matter whether the "then" is true or not. This is frustrating and unacceptable and is going to result in thousands of people paying much higher taxes.

mglauner

The IRS considers all distributions reported on Form 1099-R as 'Retirement Distributions'. As such, they are all subject to RMD.

Delete/re-enter your 1099-R and when asked for the RMD amount, you could enter an amount less than or equal to the Distribution amount. Neither the IRS nor TurboTax know what your RMD should be. They expect you and/or your plan administrator to handle this properly.

If you're using TurboTax Online, be sure to clear your Cache and Cookies first.

Here's more info on 1099-R for Pensions, Annuities, Retirement.

@benglebret

benglebret

This is a flaw in the TurboTax program. I talked to someone about it two weeks ago and it is still not fixed, which really ticks me off. You were probably asked to fill in your RMD at the very end when there is a check for skipped information. It takes you to your 1099-R. If you scroll up from the box that asks for the RMD there is a box that has been hard checked by TurboTax, that is, you cannot uncheck it. The box says, "If Box 7 code is 2 or 5, check if this distribution is from a Roth IRA". Some idiot in coding hard checked that box. Maybe they didn't read the first part of the sentence because chances are your Box 7 just has a Q and not a 2 or 5. If you look at your hard copy of your 1099-R, the back of the statement defines the codes. Both codes result in a penalty, but most likely neither of them apply to you and are not on your statement. You should not report your RMD in response to this coding error.

After talking to a help person for about an hour about this, and finally convincing him that this box should not be checked, I was told that IT was going to fix it and someone would call me back. No one has and that was two weeks ago. I just checked my taxes and the same problem is still there. I suggested that I just ignore the prompt to put in my RMD since my 1099-R doesn't have a number code in Box 7, it has a Q. The help desk said I should wait until they fix it. This makes me wonder if there are other flaws that are costing me hundreds of dollars. It also makes me wonder how many thousands of users are paying hundreds or thousands of dollars more because of this flaw. I think I'm done with TurboTax after this year. Still waiting for a resolution.