1099-R and Form 5329

L1: 1099-R and Form 5329Although there was some initial confusion as noted in a 6/24/04 post on this site re: the coding of box 7 in 1099-R, from what I gather the appropriate code in box 7 of 1099-R for an under age 59.5 SEPP is still code 2. If code 1 is marked in box 7, then the taxpayer needs to file Form 5329 to inform the IRS the 1099-R was for a SEPP and no 10% penalty is due. However, none of the 7 parts of Form 5329 are for non-qualified variable annuities. How should a taxpayer notify the IRS of a SEPP from a non-qualified variable annuity if box 7 of 1099-R is coded with a 1? Should Form 5329 be filed with a note included to the IRS that the distribution was from a non-qualified plan? Or am I missing something because SEPPs from non-qualified variable annuities have been an exception to the 10% penalty for years under 72(q)?2004-09-17 16:39, By: S, IP: [68.228.85.194]
L2: 1099-R and Form 5329Actually there wasn’t any confusion regarding the code to useon IRS Form 1099. The IRS clearly changed the rules and then based on pressure (mostly from the life insurance industry) changed them back to what they initially were.
The directions for a code of 2′ on 1099 include the following Any other distribution subject to an exception under section 72(q), (t), and (v) that is not required to be reported using Code 1, 3, or 4.
There isn’t a real distinction made between a fixed annuity and a variable annuity both are subject to the provisions of 72(q). If you get a code of ”1”, file 5329 – refer to the instructions.2004-09-18 09:32, By: Gfw, IP: [172.16.1.75]

L2: 1099-R and Form 5329Re: your first paragraph, that is what I gathered from reading that series of posts. Sorry if my comments implied otherwise.
My orginal question remains. The instructions to Form 5329 don’t address non-qualified plans and Form 5329 does not include a line for SEPPs from non-qualified plans. Thus, how should a taxpayer notify the IRS of a SEPP from a non-qualified annuity if box 7 of 1099-R is coded with a 1?
Thanks in advance and for the excellent site.2004-09-19 13:14, By: S, IP: [68.228.85.194]

L2: 1099-R and Form 5329Unless I’m missing something, use line 2 on Form 5329with 02 as the exemption number.
The instructions can be found at http://www.irs.gov/pub/irs-pdf/i5329.pdf -Exemption 02 – is detailed on page 2.
2004-09-19 13:23, By: Gfw, IP: [172.16.1.73]

L2: 1099-R and Form 5329Line 2 on Form 5329 is for Part 1. Per the instructions and the form, Part 1 is for qualified retirement plans. My annuity is non-qualified. Hence, my question remains how should a taxpayer notify the IRS of a SEPP from a non-qualified annuity if box 7 of 1099-R is coded with a 1?2004-09-19 13:51, By: S, IP: [68.228.85.194]

L2: 1099-R and Form 5329It appears that while you read the instructions, you missed a few details.
The instructions to form 5329 reference you to IRS Publication 575 which deals with annuities and pensions. If you then read pub 575 you will find (I’ll let you search) a section that states that you complete form 5329 if box 7 on form 1099-R is improperly coded with a ‘1’. 2004-09-19 14:00, By: Gfw, IP: [172.16.1.73]