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I started a 72T in 2014, at 56. 2018 was 5th required equal dist, at 60, so dist. now coded 7. TT did not create 5329, due to code 7. Do I need to create 5329 for yr 5?

Forum|Forum|7 years ago
June 5, 2019
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I started a 72T in 2014, at 56. 2018 was 5th year of required equal distribution, at 60. Last year (prior to 59 1/2) the dist. was coded with a dist. code of 1. Then turbo tax generated a 5329 where it detailed that the distribution was a '2' (series of equal periodic pymts). Turbo Tax did not create a 5329 for 2018 since my distr. was coded as 7 (normal). However, the 72T requirement is for a minimum of 5 years. This is year 5 - so do I need to create 5329 for this 5th 5? I know I cannot get the dist code changed by the investment company.

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Best answer by dmertz

You do not need Form 5329; compliance with the terms of the 72(t) plan does not need to be supported by reporting on Form 5329. Had the payer been using code 2, no reporting on Form 5329 would have been required for the earlier years either. All you need to do is make sure that, in case the IRS asks for them, you have sufficient account records to show that you did not modify your series of substantially equal periodic payments before reaching age 59½ or before 5 years had elapsed from the date of the first distribution under the plan. As long as your 2018 Form 1099-R from this plan does not suggest a modification of the series, say, by showing too small of a distribution for 2018, the IRS would only know of a modification if they audited you with regard to these distributions.

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dmertzAnswer

Employee

You do not need Form 5329; compliance with the terms of the 72(t) plan does not need to be supported by reporting on Form 5329. Had the payer been using code 2, no reporting on Form 5329 would have been required for the earlier years either. All you need to do is make sure that, in case the IRS asks for them, you have sufficient account records to show that you did not modify your series of substantially equal periodic payments before reaching age 59½ or before 5 years had elapsed from the date of the first distribution under the plan. As long as your 2018 Form 1099-R from this plan does not suggest a modification of the series, say, by showing too small of a distribution for 2018, the IRS would only know of a modification if they audited you with regard to these distributions.