5329

L1: 5329Who files the form 5329?What if the form was never filed by the financial instituion or the taxpayeryet the 1099”s are coded 2 for the five years the plan was supposedlyset up and distributionswere taken? What now?2008-01-14 11:50, By: sem, IP: [74.237.252.117]
L2: 5329If the 1099R was coded “2”, then there is no need for the 5329. The IRA custodian recognized the 72t exception for the plan and reflected it with the proper exception coding. The 5329 is only needed when the 1099R does not reflect the actual situation and the taxpayer needs to correct the coding by adding the form to their 1040, or in some cases by filing it on a stand alone basis.2008-01-14 13:27, By: Alan S., IP: [24.116.165.60]

L2: 5329Hello, Sem:
When I realized in early-2007 that my 2005 tax filing had not claimed the 72t exception to my SEPP early IRA withdrawals, I filed a form 5329 as a stand-alone correction to my 2005 taxes. The IRS responded that since this did not change the amout of tax owed, there would be no penalty. My primary reason for doing this was that I wanted to be sure that my SEPP plan was in effect and recognized by the IRS. Early on, I did not realize that my custodian was not coding my 1099R correctly or that I needed to file form 5329 to correct their 1099R coding of 1. I was concerned that by not filing a form 5329 for tax year 2005, my SEPP would not be recognized and that all sorts of problems could occur at a later date. Fortunately, the amended tax return in 2006 went fine and I now use tax software on my PC which kicks out a completed form 5329 based on the info I give it.
One thing that was a little strange is that the tax software also kicks out a completed form 5329 for my wife. While she does not have a SEPP, she did retire from the local school district after 30 years of service in 2001 at the age of 51. She receives a pension but cannot access the money in her pension plan directly. A monthly check comes from the state but that is it. Somehow, the tax software thinks that she needs a form 5329 but is seems odd to me that she does. We had not filed any form 5329s for her for the previous4 years that she has been retired, yet there seems to be no implication of impropriety in her case. The IRS did not question the sudden apearance of her form 5329 in 2006, so we will probably continue going with what the tax software suggests until she is 59.5 years of age. That will occur next year. When it does, the tax software will probably stop kicking out form 5329s.
Ed_B2008-01-16 16:48, By: Ed_B, IP: [67.170.159.37]