What is IRS Form 5329?

Form 5329 is used to report penalties that you may owe on your IRA or 401(k) , or to correct errors made by your custodian. Examples may include the following:

  • Incorrect reporting of your distribution by your IRA Custodian: 
    • Your IRA custodian reports a Code 1 in Box-7 of your 1099-R, when it should be a different code. Generally, Code 1 would be used for distributions that you take while you are under age 59 ½ which are subject to a 10% early distribution penalty, unless you qualify for an IRS approved exception. If you were eligible for a waiver for the penalty, then Form 5329 must be filed to let the IRS know that the Code 1 on the 1099-R should be disregarded.
  • You miss your IRA or 401(k) RMD deadline:
    • In most cases, your required minimum distributions (RMD) must be taken by December 31st of the year for which it is due. If you miss the RMD deadline, you owe the IRS a penalty of 50% of the amount that you did not take. This penalty is reported on IRS Form 5329.
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