Form 5329: Additional Taxes on Qualified Plans (Including IRAs)
Form 5329 is most commonly used to report an additional tax on distributions you take before reaching age 59½ from a qualified retirement plan or modified endowment contract. Generally, if you receive an early distribution from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income is subject to a 10% additional tax.
Less common uses of Form 5329 include reporting additional taxes on--
- Certain Distributions From Education Accounts
- Excess Contributions to Traditional IRAs
- Excess Contributions to Roth IRAs
- Excess Contributions to Coverdell ESAs
- Excess Contributions to Archer MSAs
- Excess Contributions to Health Savings Accounts (HSAs)
- Excess Accumulation in Qualified Retirement Plans (Including IRAs)
When do I need to file Form 5329?
You must file Form 5329 if any of the following apply.
- You received an early distribution from a Roth IRA, the amount on line 23 of Form 8606, Nondeductible IRAs, is more than zero, and you are required to enter an amount that is more than zero on Form 5329, line 1.
- You received an early distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA). However, if distribution code 1 is correctly shown in box 7 of all your Forms 1099-R, and you owe the additional tax on each Form 1099-R, you do not have to file Form 5329. Instead, see the instructions for Form 1040, line 58, or Form 1040NR, line 56, for how to report the 10% additional tax directly on that line.
- You received an early distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA), you meet an exception to the tax on early distributions, and distribution code 1 is shown in box 7 of Form 1099-R.
- You received an early distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA), you meet an exception to the tax on early distributions from the list on page 3, but box 7 of your Form 1099-R does not indicate an exception or the exception does not apply to the entire distribution.
- You received taxable distributions from Coverdell ESAs or QTPs.
- The contributions for 2012 to your traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, or HSAs exceed your maximum contribution limit, or you had a tax due from an excess contribution on line 17, 25, 33, 41, or 49 of your 2011 Form 5329.
- You did not receive the minimum required distribution from your qualified retirement plan.
Are there any exceptions to the additional tax on early distributions?
The additional tax on early distributions does not apply to the distributions described below.
- Qualified retirement plan distributions (does not apply to IRAs) you receive after separation from service in or after the year you reach age 55 (age 50 for qualified public safety employees).
- Distributions made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from an employer plan, payments must begin after separation from service).
- Distributions due to total and permanent disability.
- Distributions due to death (does not apply to modified endowment contracts).
- Qualified retirement plan distributions up to (1) the amount you paid for unreimbursed medical expenses during the year minus (2) 7.5% of your adjusted gross income for the year.
- Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (does not apply to IRAs).
- IRA distributions made to unemployed individuals for health insurance premiums.
- IRA distributions made for higher education expenses.
- IRA distributions made for purchase of a first home, up to $10,000.
- Distributions due to an IRS levy on the qualified retirement plan.
- Qualified distributions to reservists while serving on active duty for at least 180 days.
- Other less common exceptions, see Form 5329 instructions.
Entering Form 5329 into TurboTax.
Don't worry! When you use TurboTax to prepare your taxes, we’ll ask you questions about your retirement distributions, figure out if you are subject to the additional tax on early distributions, and fill in all the right forms for you.
Information for Form 5329 is entered in the Other Tax Situations section of the interview, in the Extra Tax on Early Retirement Withdrawals category. If you need to return to the Form 5329 information after completing the TurboTax interview, follow these directions to jump directly to the entry screen.
- Select the Federal Taxes tab (the Personal tab in the Home and Business edition).
- Select the Other Tax Situations section
- Scroll down the Other Tax Situations screen until you see the "Additional Tax Payments" Group.
- Click on the Start/Update button to the right of the "Extra Tax on Early Retirement Withdrawals" Category.
- Follow the prompts.
Note: If both you and your spouse had a distribution from a retirement account that meets the above filing requirements, you will each need to file a Form 5329. TurboTax will ask you about this situation, and will take care of filling out both forms.
If you need to correct or change any information you have entered on your 5329, the steps you take depends on if you have already filed your tax return.
- If you have yet to file your return, simply follow the navigation instructions above, and correct or change your information.
- If you have already filed your return, you will need to amend your return. Please click here for instructions.
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