Form 5329 Included for Early Distribution Erroneous

Forum|Forum|1 year ago
January 27, 2025
2 replies
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TurboTax Windows Desktop is generating Form 5329 Part I for additional tax on early withdrawals. I entered Pension and IRA distributions as part of my income and selected 7-normal distribution in Box 7. Therefore Form 5329 is not required and should not be generated. Turbo tax has generated Form 5329 for each distribution, listed the entire distribution on line 2, Part I, and listed exception 12. Is there a way to delete Form 5329 before filing my taxes with IRS?

BillM223

Please note that you may be required to file the 5329, even if you can provide an exception to the penalty.

"You must file form 5329 if any of the following apply:"

You received a distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA) and you meet an exception to the tax on early distributions from the list shown later, but box 7 of your Form 1099-R doesn’t indicate an exception or the exception doesn’t apply to the entire distribution.

So if your early distribution penalties were waived, you should still have the exception code on line 2 to the left of the number column. Is that the case?

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scottc73Author

Thanks for your response. The situation described in your reply does not fit my situation since my distributions are not early distributions subject to the tax. I am over 70 and have been taking distributions from my IRA and Pension for years. I believe there is a bug in the TurboTax program.

VolvoGirl

Employee

Then I would go back and check your birthdate under My Info or Personal info. Are you married? Is your spouse younger than 59 1/2?

There are a couple bugs with 1099R. Mainly about the RMD. Do you need to take the RMD? Could be this…..

Tax on excess accumulations. That’s because Turbo Tax thinks you didn’t take the full RMD from all your accounts.

Turbo Tax changed this year. When it asks about the RMD it is only asking for that one 1099R. You need to enter the amount in box 1 on that 1099R for the RMD, not the total RMD for all.

ampalo

Did you find a resolution to this? I have the same thing happening with my parents taxes for their CSA 1099Rs. The only difference between those and the 1099Rs from their IRAS is that the box for IRA/SEP/SIMPLE is not checked (or not there at all) on the 1099Rs for which TT is generating a 5329 with the box "incorrect early distribution" filled out with the amount of their distribution. I don't see what I can change in TT to keep these forms from generating. They are both over the required age and not taking an early distribution. It didn't do this in previous years either.

scottc73Author

Hi ampalo. I just deleted Form 5329 in quicken's form mode before filing.

ampalo

Thanks for the reply. I am planning to delete also, particularly since the form doesn't calculate anything additional, and it seems to be an error since all the Box 7s on the 1099s only have "7" in the code and no letters or #s that would generate the exception as noted in the IRS instructions. I may pose this question separately to the community again but it does seem to be an error within TT. Thanks.