My husband's 1099R has code 7D in box 7. Why did turbo tax complete form 5329 and list the 1099R taxable amount on line 2 with an exception code of 12?

Forum|Forum|1 year ago
February 25, 2025
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Best answer by BillM223

Thank you for the suggestion. However, I just checked and the IRA box is not checked. My husband has another small annual annuity payment with a distribution code of 7 and Turbo Tax handled that properly with no form 5329 completed. I just deleted the 1099R information and entered it again. Same thing - form 5329 was created with the exception code of 12. Do you have any other suggestions? After reading the IRS publication for form 5329, I feel that the form 5329 is not needed at all. How can Turbo Tax be corrected so I can e-file my taxes?

I will make this suggestion...if line 4 on your 5329 is zero or blank, then you should be able to e-file even though you have that 5329, because although the exception seems unnecessary, it doesn't add any tax to your return.

Usually taxpayers don't want the 5329 added because it forces them to upgrade the product so costs more, but it seems to me that you already have the CD/download product, so that doesn't matter to you.

Since it looks like you can see the 5329, are there any other entries on this form besides in Part I?

Or you can send us a sanitized version of your return so we can look at it.

Can you do me a favor? Can you send me a "token"? A token is a database index that points to a sanitized version of your return (i.e., TurboTax has removed all personal references in the return before putting it in our secure database). Here are the instructions:

TurboTax Online:

Click Tax Tools in the menu to the left.

Click Tools, and then

Click Share my file with Agent.

A pop-up message will appear. Click OK to send the sanitized diagnostic copy to us.

Provide the token number that is generated onto this thread.

TurboTax Desktop:

Select Online menu if the customer is using Windows. Select “Help” if using a Mac.

Select Send Tax File to Agent.

A pop-up message will appear, and the customer will select, Send. If using Mac "Send Tax File to TurboTax Agent"

Note: Desktop will save a file to your computer unless you uncheck the box.

Another message will appear. Provide the token number that is generated onto this thread.

At the bottom of your reply (with the token) add "@" "BillM223" (without the space in between and without the double quotes) so I will be notified.

This will let us see what is happening on your return. Thanks.

ThomasM125

Form 5329 was apparently completed to remove a penalty for early withdrawal of funds from a retirement account.

The exemption code of 12 would indicate that the distribution was incorrectly coded as being subject to an early withdrawal penalty because the recipient had not reached the age of 59 1/2. This would happen if it was an early distribution but you indicated that there was an exception to the penalty. You can learn more about exceptions to the early withdrawal penalties in this IRS notice.

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Ellis0822Author

My husband is age 70 - so there was no early withdrawal of funds. The proceeds are from a paid up life insurance policy which was rolled over to create this annuity - equal annual payments for 10 years. The code of 7D on the 1099R box 7 indicates that the amount is a "normal distribution" and an "annuity payment from a nonqualified annuity". Do we need to file form 5329 and if we do need to file it, what would be the correct exception number on line 2 of that form? And how do I correct Turbo Tax?