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Form 5329 still required for Non Qualified Annuity distribution?

Forum|Forum|2 years ago
February 13, 2024
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I am copying a previous reply. Why has this not been fixed since 2019? Do I just delete the Form before filing?

Okay- wont let me copy previous. Basically has to do with Form 5329 being generated when taking a distribution from a Non-Qualified annuity. Keeps putting total distribution amount on Line 2 as an "Incorrect early distribution -code L". Supposedly has been going on since 2013 with lots of queries in 2019. IS Turbo Tax populating this form in Error? Do I just delete the Form before filing? Somone who is dealing with this issue please respond with advice or how to resolve it, or confirm it has to be filed although no penalty or tax due.

Thanks in advance.

Best answer by dmertz

This is apparently only a problem in the CD/download version of TurboTax. TurboTax has a similar problem with ESOP dividend distributions reported with code U. You can just delete Form 5329 in forms mode of TurboTax and as long as you do not revisit the related Form 1099-R in step-by-step mode, the entry on line L of TurboTax's Distributions Not Subject to Additional Tax Smart Worksheet will not reappear.

However, in the case of code D, this problem does not happen if code D is combined with code 7 to explicitly indicate that it's not an early distribution, which is permissible. Code D is generally considered to be a secondary code to indicate the nonqualified nature of the insurance product, so payers will generally combine code D with code 1, 2, 3, 4, 7 or C. On the other hand, combining code U with any other code is not permitted.

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frankloc76Author

Where are all my experts?? No one has an answer for this question?? Help!

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dmertzAnswer

Employee

This is apparently only a problem in the CD/download version of TurboTax. TurboTax has a similar problem with ESOP dividend distributions reported with code U. You can just delete Form 5329 in forms mode of TurboTax and as long as you do not revisit the related Form 1099-R in step-by-step mode, the entry on line L of TurboTax's Distributions Not Subject to Additional Tax Smart Worksheet will not reappear.

However, in the case of code D, this problem does not happen if code D is combined with code 7 to explicitly indicate that it's not an early distribution, which is permissible. Code D is generally considered to be a secondary code to indicate the nonqualified nature of the insurance product, so payers will generally combine code D with code 1, 2, 3, 4, 7 or C. On the other hand, combining code U with any other code is not permitted.