Form 5329
Can anyone help me input this info correctly because i took out an early withdrawal
from my Roth IRA?
I using a code 3 on the form but don’t know how else to fill in the blanks correctly. The IRS
rep said i should only fill out Part 1 Line 2. Here is the snippet from the form 5329. Please
help.
Part I Additional Tax on Early Distributions. Complete this part if you took a taxable distribution before you reached age 59½
from a qualified retirement plan (including an IRA) or modified endowment contract (unless you are reporting this tax directly on
Form 1040 or Form 1040NR—see above). You may also have to complete this part to indicate that you qualify for an exception to
the additional tax on early distributions or for certain Roth IRA distributions (see instructions).
1 Early distributions included in income. For Roth IRA distributions, see instructions . . . . . . 1
2 Early distributions included on line 1 that are not subject to the additional tax (see instructions).
Enter the appropriate exception number from the instructions: . . . . . . . . . 2
3 Amount subject to additional tax. Subtract line 2 from line 1 . . . . . . . . . . . . . 3
4 Additional tax. Enter 10% (0.10) of line 3. Include this amount on Form 1040, line 59, or Form 1040NR, line 57 4
Caution: If any part of the amount on line 3 was a distribution from a SIMPLE IRA, you may have
to include 25% of that amount on line 4 instead of 10% (see instructions).
Your help is greatly appreciated,
Arthur White
Permalink Submitted by Alan - IRA critic on Wed, 2017-09-20 19:48
The 10% penalty only applies to the taxable portion of your distribution. You must report the distribution on Form 8606 Part III, but to complete this form you must know what your balance of regular Roth IRA contributions is and also the amount of Roth conversions you did and when you did the conversions. Most people do not keep track of this info and therefore are not prepared to complete Form 8606. Did you take out more than the total of regular Roth IRA contributions you have made since 1998? If not, your distribution is tax and penalty free and you would not need Form 5329 at all. Please advise, and if the info results in having to file a 5329 as well, I can then help you with that form. But the 8606 comes first.