5329 form and how to complete it to avoid penaliti
L1: 5329 form and how to complete it to avoid penalitiI received my 1099R from myIRA custodian and box 7 this year has a 1 (was coded 2 in previous years). I must now complete a 5329 form and don”t know what I put in it to get back to the 2 and avoid penalities. I am using Turbo Tax and have no idea how to get to the 5329 form. If I use the 1 on the screen that has the IRA infoI”m being hit with approx. $3000.00 more than if it is when changed to a 2.
I have a SEPP and am younger than 55. I need help getting the form correct.
Thank you and keep the GREAT info coming!
2008-02-20 18:14, By: florida flamingo, IP: [184.108.40.206]
L2: 5329 form and how to complete it to avoid penalitiFlorida Flamingo: As you go further into the return – actually near the end, it will ask you(since you are under 59.5) if there is an exception for the IRA withdrawal – It is there thatyou will select Option #2 (I think) – It says something about systematic or periodic withdrawals. Hope this helps!
meb242008-02-20 18:43, By: meb24, IP: [220.127.116.11]
L2: 5329 form and how to complete it to avoid penalitiHello Flamingo:
I have to admit, I am not happy with the way Turbotax handles this situation; but, it does handle it correctly. Way up front in the income section, you put your 1099R in with code 1 and it taxes and surtaxes the distribution as reflected in the “tax due” box in the upper left corner. It is not until you get to the federal review section (like section 6 or 7) that you get prompted to allocate your distribution between a dozen or so acceptable exception reasons. Anywway, at that point you re-enter your distribution, I think on line 2 of that screen and like magic; the surtax goes away and Turbotax creates Form 5329 for you.
2008-02-21 07:14, By: TheBadger, IP: [18.104.22.168]
L2: 5329 form and how to complete it to avoid penalitiHello, Florida Flamingo:
I don”t use TT but do use the Tax Cut program. As I recall, it does this the same way as TT. First you give it the 1099 info and only later on does it ask if there is an applicable exception to the 10% penalty tax. If you respond that there is, it will spit out a completed form 5329. It would seem logical to do that immediately after informing it that money was being taken from an IRA but that”s not what these programs do.
Oddly enough, TC also spit out a form 5329 for my wife. She is a retired school admin who retired on a state pension at age 51 in 2001… after 30 years of service. We never filed a 5329 for her in any previous year. Although she is younger than age 59.5, there is no way that she can take any money from her pension that the state does not give her. It”s not clear to me why she needs a 5329 but TC seems to think that she does so we sent it in with the rest of the tax forms. We got a prompt refund and no questions from the IRS, so it must be OK.
Ed2008-02-23 08:42, By: Ed_B, IP: [22.214.171.124]
L2: 5329 form and how to complete it to avoid penalitiIt”s possible that these programs issue a 5329 for each spouse when the first one is triggered just to alert the taxpayer that the form is somewhat unique in being limited to the distributions of only one spouse. This would alert the taxpayer not to attempt creating a disallowed joint 5329. The same could apply for an 8606.2008-02-23 17:38, By: Alan S., IP: [126.96.36.199]