Your Required Minimum Distribution, or RMD, should be reported to you on form 1099-R. You will report this in the program as follows:
- Federal Section
- 1099-R, RRB-1099, RRB-1099-R, SSA-1099
- Add or Edit a 1099-R
What is a Required Minimum Distribution?
Your required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year. You generally must start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 72 (70 ½ if you reach 70 ½ before January 1, 2020). Roth IRAs do not require withdrawals until after the death of the owner.
The Required minimum Distribution amount will be included in your taxable income except:
- any part that was taxed before (your basis)
- any part that can be received tax-free (such as qualified distributions from designated Roth accounts).
If a portion is not taxable, it should not be included in box 2a of your 1099-R.
What if I didn't take all of my RMD on time?
If you fail to take your full RMD on time, the amount not withdrawn is taxed at 50%. You must file form 5329 on your federal tax return for the year that the full RMD was not taken.
The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. In order to request a waiver of the penalty for late withdrawal or your RMD you should complete form 5329 and enter your reason for requesting a waiver.
To locate form 5329 in our program log in and click on:
- Federal Section
- Other Taxes
- Additional Taxes on Qualified Plans and Other Accounts
- Scroll down to Part IX to complete this section of the form.
How do I complete Form 5329, Part IX?
Please refer to Form 5329 instructions,
- In the first box enter the amount of your RMD for the 2022 tax year.
- In the second box, if no amount of your RMD was withdrawn before the deadline leave blank. If a portion of your RMD was taken before the deadline enter the applicable amount here. The program will figure the tax at 50% of the difference between the amount you are required to take and the amount actually taken.
To claim a waiver for the 50% tax penalty:
- Check the box to claim a waiver, then enter the amount of the RMD which you request a waiver on. If you request a waiver on the full amount please enter the full amount of the RMD not withdrawn on time.
- Complete the "explanation of waiver" to detail to the IRS your circumstances and the steps you have taken to resolve the issue.
Additional information and Frequently Asked Questions about RMD can be found on the IRS website.