L1: Form 5329I just did my taxes and accounted for my SEPP on form 5329…is this a form I have to fill out every year or is the initial filing sufficient for my future distributions?2012-03-22 16:38, By: joerosh, IP: [188.8.131.52]
L2: Form 5329While you maintain a valid SEPP, you will have to include Form 5329 to claim exception code “02” every year that the 1099R contains Code 1 in Box 7. For most custodians now, the 1099R will show Code 1, so you will probably have to file the 5329 each year showing the exception code. This is very easy to complete however.
Without it the IRS will bill you for the 10% penalty.2012-03-22 17:17, By: Alan S, IP: [184.108.40.206]
L3: Form 5329I have to go back and look but I think my 1099R contained code 2 in box 7 andI just reitterated it on the 5329…did I not have to fill out the 5329 if it said code 2?2012-03-22 18:49, By: joerosh, IP: [220.127.116.11]
L4: Form 5329If the 1099R shows code 2 you don’t need a 5329. A 5329 with respect to early withdrawal only has two uses:
1) To report a penalty if the 1099R incorrectly gave you a pass
2) For SEPP participants to claim the exception to Code 1 (exception code 02)to eliminate the penalty
(or for other taxpayers to claim one of the other exceptions available for distributions coded 1)
If you get the Code 2 from the custodian, this is even better and somewhat more credible to the IRS since it shows IRA custodian underwriting of your plan.
If your custodian changed from 2 to a 1, you might ask them why? It may well be that they changed their policy and decided to use the 1 code like most of the others.2012-03-23 17:23, By: Alan S, IP: [18.104.22.168]