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IRS Form 5329: Instruction for How to Fill it Right

Audrey Goodwin

2024-04-18 11:56:27 • Filed to: Other IRS Forms • Proven solutions

Form 5329 is used in report additional taxes on Qualified Plans and other tax favorable accounts. Form 5329 is most normally used in reporting an additional tax on distributions that you take before reaching the age of 59 from a modified endowment contract or qualified retirement plan.

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Instructions for How to Complete Form 5329

Step 1: Get Form 5329 from a tax preparation office, a government agency, or you can simply download it online and open it on PDFelement. Instructions come with paper forms or you could also download an IRS copy online.

Step 2: Write your personal details which include your name, address, as well as Social Security number.

Step 3: Complete Part I – Additional Tax on Early Distributions. On the line 1, declare your any early distributions you got as your income. You don't have to include Roth IRA distributions; these are going to be included later. On the line 2, write in your early distributions which also included on line 1, that are not applicable for additional taxes – you can find the exceptions on the instructions of the form. Separate the line 2 from the line 1 to be able to get the amount subject to added tax and write in the result on the line 3. Multiply the result of the line 3 by 10%. You have to make sure that you write this amount on Form 1040, line 58, or Form 1040NR, line 56. If any part of the line 3 amount was a delivery from a Simple IRA, you might need to include 25% of that amount on line 4 rather than 10%. Check the instructions in order for you to see if it's needed.

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Step 4: Fill out the Part II – Additional Tax on Certain Distributions from Education Accounts. Fill out this section if you stated your income amount on Form 1040NR or Form 1040, line 21. Enter distributions included as revenue on line 5 and exceptions on the line 6. Then write the taxable amount – line 5 minus line 6 – on the line 7, and the additional tax amount – 10% of the line 7 – on the line 8.

Step 5: Complete Part III – Additional Tax on Excess Contributions to Traditional IRAs, if you added more money than permissible to your traditional IRAs. On the line 9, write the additional contributions from the line 16 of the Form 5329. If the amount is zero, then skip to line 15. Otherwise, write lines 10 through 17 by writing "0" in Line 10, writing traditional IRA distributions counted in in income on the line 11, and including distributions of the previous year's excess contributions on the line 12. Add the lines 10-12 and enter the amount on line 13, then deduct the line 13 from line 9 to compute the excess contributions of the previous year. Write "0" if the amount is below than zero. Write extra contributions on the line 15, and complete excess contributions, the amount of lines 14 and 15, in line 16. Enter 6% of the smaller of the line 16 or the worth of your traditional IRAs on December 31 of the tax year.

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Step 6: Complete Part IV – Additional Tax on Excess Contributions to Roth IRAs. If you contributed more to your Roth IRAs than is permissible or you had an amount on the line 25 from your preceding year's Form 5329. The procedure and tax penalty is similar to the Part III.

Step 7: Complete Parts V, VI, and VII – This is if you had extra contributions to a Coverdell education savings account, a health savings account, or an Archer medical savings account. Again, you will have to enter and add extra amounts, and then multiply the figure by 6% to get at the amount of tax that is due.

Step 8: Complete Part VIII – Additional Tax on Excess Accumulation in Qualified Retirement Plans. This is necessary if you did not receive the minimum required distribution from the qualified retirement plans. The tax you owe is 50% of the difference between the minimum necessary distribution and the amount you actually got.

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Step 9: Sign and write the date on the form. Write a money order or check for the tax amount due and send it to the IRS.

Tips and Warnings for Form 5329

When to File: The Form 5329 should be filed with your 2015 Form 1040 or Form 1040NR by April 18, 2016.
Where to File:The Form 5329 should be filed together with Form 1040 or Form 1040NR. Enclose, but do not attach, a check or money order payableto "United States Treasury" for any taxes due. Write your SSN and "2015 Form 5329" on the check.
It's against the rules to contribute too much to your tax-favored account. There are limit to how much you can contribute to IRAs and such. If you write in too much, you need to fill out IRS Form 5329 again and pay an extra tax.
If you rolled over the part of the qualified retirement plan, the part rolled over isn't applicable for the 10% extra tax on early distributions.
If you didn't make an in-plan Roth rollover, you have to include on line 1 of the form only the amount from box 2a of the 2015 Form 1099-R stating the early distribution.

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