H&R Block, 72yo, First RMD split between 22/23 issue

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runner26
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H&R Block, 72yo, First RMD split between 22/23 issue

Post by runner26 »

I am using H&R Block download software. My RMD for 2022 is 18,400. I made my first withdrawal in 2022 in the amount of 4,000. Due to keeping under an estimated IRMAA for 2024, I withdrew the smaller amount in my first year (allowed for 72yo), with the ballance 14,400 withdrew on Jan 3rd. I will take my 2023 RMD latter this year.

The problem is that the Q&A for Block askes my RMD amount for 2022 (I entered 18400), how much I withdrew in 2022 (I entered 4000), it then says I owe a huge penalty and calculates it in. No recognition that I am 72 and just warning me I need to make the additional withdrawal. Should I lie to the software and say I paid it all? How did you deal with this?
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runner26
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by runner26 »

More info. It ended up filling out form 5239. This doesn't seem right to me. Being my first year and didn't 'need' to make a withdrawal, maybe I should not check the box that took me down the 5239 rabbit hole. Is 5239 required for a partial RMD payment in the first 72yo year.

Anyone have knowledge of this?
secondcor521
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by secondcor521 »

If you read the instructions on page 7 of IRS Pub 590-B about this issue, it seems that you technically did not have an RMD in 2022, but that the amount you distributed in 2022 can count towards your 2022/2023 RMD.

I don't know how H&R Block software works, but I'd be inclined to tell it that my 2022 RMD was zero (which should get rid of the Form 5329 stuff, which I agree you do not need), then for 2023 I'd enter an RMD of $18,400 plus whatever your 2023 RMD is. The problem here is that if H&R Block software is broken in the way you describe, it might also be broken in that it would not allow you to enter the $4,000 2022 distribution as counting towards your 2023 RMD (as the IRS instructions clearly say you can do).

Personally, I would message H&R Block software support and ask them how to properly handle this situation. If I didn't like their answer - which for me would be if it seemed too awkward of a workaround or put numbers on the tax forms that were simply wrong - I'd probably look for tax software product that properly handles this issue. TurboTax might be a likely one to investigate.
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runner26
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by runner26 »

Secondcor521, thanks, will see if I can get a response from Block, if someone here has not yet worked it out.
Gryphon
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by Gryphon »

I tried entering this scenario into TurboTax - turned 72 in 2022, RMD was 18400 but I only took 4000 - and it did the same thing as H&R Block, it filled out 5329 Part IX because it thinks I didn't withdraw enough.

However, there was one question that I'm not sure I answered correctly. It asked me to select one of the following:

- I received all the RMD for 2022
- I did not receive all the RMD for 2022
- I was not required to take an RMD for 2022

I chose the middle option, but if you're not required to take your age 72 RMD until April 2023 I wonder if the last option would be the correct answer.
toddthebod
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by toddthebod »

I'm pretty sure you just need to fudge it. There's nowhere on the tax return that says, "this is my RMD," is there? It's just a taxable distribution from an IRA. So tell the software your RMD was $4,000, and that you took a distribution of $4,000. Next year add $14,400 to the 2023 amount and tell the software that is your RMD. The only reason they ask what your RMD amount is is to trigger form 5329 if necessary.
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by runner26 »

toddthebod wrote: Thu Jan 26, 2023 11:26 pm I'm pretty sure you just need to fudge it. There's nowhere on the tax return that says, "this is my RMD," is there? It's just a taxable distribution from an IRA. So tell the software your RMD was $4,000, and that you took a distribution of $4,000. Next year add $14,400 to the 2023 amount and tell the software that is your RMD. The only reason they ask what your RMD amount is is to trigger form 5329 if necessary.
I agree with you, I had the same thought after sleeping on it. I rememberd that I read the IRS gets its RMD information from the custodians in the May report they send in which has balance and distribution reporting. 5329 is for when you know you have a penalty due or messed up and need to ask for an explanation.
SuzBanyan
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Re: H&R Block, 72yo, First RMD split between 22/23 issue

Post by SuzBanyan »

Gryphon wrote: Thu Jan 26, 2023 10:36 pm I tried entering this scenario into TurboTax - turned 72 in 2022, RMD was 18400 but I only took 4000 - and it did the same thing as H&R Block, it filled out 5329 Part IX because it thinks I didn't withdraw enough.

However, there was one question that I'm not sure I answered correctly. It asked me to select one of the following:

- I received all the RMD for 2022
- I did not receive all the RMD for 2022
- I was not required to take an RMD for 2022

I chose the middle option, but if you're not required to take your age 72 RMD until April 2023 I wonder if the last option would be the correct answer.
I would agree that the last option seems correct.
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