Instructions for Filling Out Form 5329

This document offers a comprehensive guide on completing Form 5329, which is used to report additional taxes on qualified plans like IRAs and other tax-favored accounts. It covers filing requirements, key definitions, and specific instructions for each section of the form, as well as information on the Privacy Act and Paperwork Reduction Act Notice.

What is Form 5329?

Form 5329 is a tax form used by the Internal Revenue Service (IRS) to report additional taxes on qualified plans, such as Individual Retirement Arrangements (IRAs) and other tax-favored accounts. The purpose of this form is to report additional taxes on various types of retirement and savings accounts, including IRAs, qualified retirement plans, modified endowment contracts, Coverdell ESAs, QTPs, Archer MSAs, HSAs, and ABLE accounts. Taxpayers must file Form 5329 if certain conditions apply, such as receiving a distribution from a Roth IRA, receiving a distribution subject to the tax on early distributions from a qualified retirement plan, or if the contributions to certain accounts exceed the maximum contribution limit. The form includes sections for reporting additional taxes on early distributions, excess contributions, and excess accumulations in qualified retirement plans. The IRS may waive part or all of the additional tax if the shortfall in the amount of distributions was due to reasonable error and reasonable steps are being taken to remedy the shortfall. Form 5329 must be filed by the due date, including extensions, of the taxpayer's tax return.

Who Must File Form 5329?

Individuals must file Form 5329 if they meet any of the following conditions:

1. Received a distribution from a Roth IRA with specific tax implications.
2. Received a distribution subject to the tax on early distributions from a qualified retirement plan (excluding Roth IRAs).
3. Received a distribution with an exception to the tax on early distributions but the exception is not indicated on Form 1099-R or doesn't apply to the entire distribution.
4. Received taxable distributions from Coverdell ESAs, QTPs, or ABLE accounts.
5. Contributed more than the maximum limit to traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, HSAs, or ABLE accounts in 2023 or had a tax due from an excess contribution in 2022.
6. Didn't receive the minimum required distribution from a qualified retirement plan, which also applies to trusts and estates.

Form 5329 Tax Filing Deadlines and Due Dates

• Due date for individuals: Form 5329 must be filed by the due date, including extensions, of the taxpayer's tax return.
• Due date for trusts and estates: Form 5329 must be filed by the due date, including extensions, of the trust or estate's tax return.

Form 5329 Late Payment Penalty

If you fail to pay the additional tax reported on Form 5329 by the due date, you may be subject to a late payment penalty. The penalty is generally 0.5% of the unpaid tax for each month or part of a month the tax remains unpaid, up to a maximum of 25% of the unpaid tax. To avoid this penalty, ensure that you pay the additional tax on time and in full.

Step-by-Step Instructions for Form 5329

Here are the step-by-step instructions for filling out Form 5329:

1. General Instructions: Review the overview of the form, its purpose, who must file it, when and where to file, and any additional information provided.
2. Specific Instructions: Follow the detailed instructions for each part of the form, which include:

• Additional tax on early distributions
• Additional tax on certain distributions from education accounts and ABLE accounts
• Additional tax on excess contributions to traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, Health Savings Accounts (HSAs), and ABLE accounts
• Additional tax on excess accumulation in qualified retirement plans (including IRAs)

How to Submit Form 5329

To submit Form 5329, complete the form according to the provided instructions and file it with your 2023 Form 1040, 1040-SR, 1040-NR, or 1041 by the due date, including extensions, of your tax return. If you don't have to file a 2023 income tax return, complete and file Form 5329 by itself at the time and place you would be required to file Form 1040, 1040-SR, or 1040-NR.

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