See Pub. 590; Pub. 560, Retirement Plans for Small Business; Pub. 575; Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans; Pub. 970, Tax Benefits for Education; and Pub. 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.
If both you and your spouse are required to file Form 5329, complete a separate form for each of you. Include the combined tax on Form 1040, line 58.
If you are filing an amended 2009 Form 5329, check the box at the top of page 1 of the form. Do not use the 2009 Form 5329 to amend your return for any other year. Instead, see Prior tax years on page 1.
In general, if you receive an early distribution (including an involuntary cashout) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income generally is subject to an additional 10% tax. But see Exception for Roth IRA Distributions on this page.
See the instructions for line 2 on page 3 for other distributions that are not subject to the tax.
Certain prohibited transactions, such as borrowing from your IRA or pledging your IRA assets as security for a loan, are considered to be distributions and may also cause you to owe the additional tax on early distributions. See Pub. 590 for details.
Then, include on line 1 of Form 5329 the amount from your 2009 Form 8606, line 25c, plus the amount, if any, allocated to the amount on your 2009 Form 8606, line 20, and the amount, if any, allocated to line 18 of your 2005 through 2009 Forms 8606. Also include the amount, if any, from your 2009 Form 8606, line 20, on Form 5329, line 2, and enter exception number 09.
You converted $20,000 from a traditional IRA to a Roth IRA in 2005 and converted $10,000 in 2006. Your 2005 Form 8606 had $5,000 on line 17 and $15,000 on line 18 and your 2006 Form 8606 had $3,000 on line 17 and $7,000 on line 18. You made Roth IRA contributions of $2,000 for 2005 and 2006. You did not make any Roth IRA conversions or contributions for 2007 through 2009, or take any Roth IRA distributions before 2009. On July 9, 2009, at age 53, you took a $33,000 distribution from your Roth IRA. Your 2009 Form 8606 shows $33,000 on line 19; $29,000 on line 23 ($33,000 minus $4,000 for your contributions on line 22) and $0 on line 25a ($29,000 minus your basis in conversions of $30,000). First, $4,000 of the $33,000 is allocated to your 2009 Form 8606, line 22; then $15,000 to your 2005 Form 8606, line 18; $5,000 to your 2005 Form 8606, line 17; and $7,000 to your 2006 Form 8606, line 18. The remaining $2,000 is allocated to the $3,000 on your 2006 Form 8606, line 17. On line 1, enter $22,000 ($15,000 allocated to your 2005 Form 8606, line 18, plus the $7,000 that was allocated to your 2006 Form 8606, line 18). If you take a Roth IRA distribution in 2010, the first $1,000 will be allocated to the $1,000 remaining from your 2006 Form 8606, line 17, and will not be subject to the additional tax on early distributions.
For additional exceptions that apply to annuities, see Pub. 575.
If any amount on line 3 was a distribution from a SIMPLE IRA received within 2 years from the date you first participated in the SIMPLE IRA plan, you must multiply that amount by 25% instead of 10%. These distributions are included in boxes 1 and 2a of Form 1099-R and are designated with code S in box 7.