Instructions for Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

Instructions for Form 5329

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See Pub. 590; Pub. 560, Retirement Plans for Small Business; Pub. 575, Pension and Annuity Income; 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.

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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.

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If you are filing an amended 2010 Form 5329, check the box at the top of page 1 of the form. Do not use the 2010 Form 5329 to amend your return for any other year. Instead, see Prior tax years on page 1.

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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.

The additional tax on early distributions does not apply to any of the following:

A qualified HSA funding distribution from an IRA (other than a SEP or SIMPLE IRA). See Pub. 969 for details.
A distribution from a traditional or SIMPLE IRA that was converted to a Roth IRA.
A rollover from a qualified retirement plan to a Roth IRA.
In-plan rollover to a designated Roth account.
A distribution of certain excess IRA contributions (see the instructions for line 15 on page 4 and the instructions for line 23 on page 5).
Note.Any related earnings withdrawn with excess contributions are subject to the additional tax on early distributions if you were under age 591/2 at the time of the distribution.
A distribution of excess contributions from a qualified cash or deferred arrangement.
A distribution of excess aggregate contributions to meet nondiscrimination requirements for employee contributions and matching employer contributions.
A distribution of excess deferrals.
A distribution from an eligible governmental section 457 deferred compensation plan to the extent the distribution is not attributable to an amount transferred from a qualified retirement plan (excluding an eligible section 457 deferred compensation plan).

See the instructions for line 2 on page 3 for other distributions that are not subject to the tax.

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Enter the amount of early distributions included in income that you received from:

A qualified retirement plan, including earnings on withdrawn excess contributions to your IRAs included in income in 2010, or
A modified endowment contract entered into after June 20, 1988.

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.

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If you received an early distribution from your designated Roth account, you must include on line 1 the amount allocable to the taxable amount of the in-plan Roth rollover. This amount is the smaller of (a) Form 8606, line 23; or (b) the amount in the box to the far left of box 10 of your 2010 Form 1099-R. Also include on line 1 any amount in box 2a of this 2010 Form 1099-R. For more information on in-plan Roth rollovers, see Pub. 575.

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If you received an early distribution from a Roth IRA, first allocate the amount on your 2010 Form 8606, line 26, in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount).

Your 2010 Form 8606, line 27.
Your 2010 Form 8606, line 29.
Your 1998 Form 8606, line 16.
Your 1998 Form 8606, line 15.
Your 1999 Form 8606, line 16.
Your 1999 Form 8606, line 15.
Your 2000 Form 8606, line 16.
Your 2000 Form 8606, line 15.
Your 2001 Form 8606, line 18.
Your 2001 Form 8606, line 17.
Your 2002 Form 8606, line 18.
Your 2002 Form 8606, line 17.
Your 2003 Form 8606, line 18.
Your 2003 Form 8606, line 17.
Your 2004 Form 8606, line 18.
Your 2004 Form 8606, line 17.
Your 2005 Form 8606, line 18.
Your 2005 Form 8606, line 17.
Your 2006 Form 8606, line 18.
Your 2006 Form 8606, line 17.
Your 2007 Form 8606, line 18.
Your 2007 Form 8606, line 17.
Your 2008 Form 8606, line 18.
Your 2008 Form 8606, line 17.
Your 2008 Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b.*
Your 2008 Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a.**
Your 2009 Form 8606, line 18.
Your 2009 Form 8606, line 17.
Your 2009 Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b.*
Your 2009 Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a.**
Your 2010 Form 8606, line 18.
Your 2010 Form 8606, line 17.
Your 2010 Form 8606, line 23.
Your 2010 Form 8606, line 22.
Your 2010 Form 8606, line 36.

*Only include those amounts rolled over to a Roth IRA.
**Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA.

Then, include on line 1 of Form 5329 the amount from your 2010 Form 8606, line 36, plus the amount, if any, allocated to the amount on your 2010 Form 8606, line 27, and the amount, if any, allocated to line 18 of your 2006 through 2010 Forms 8606, and line 23 of your 2010 Form 8606. You need to also include on line 1, any amounts allocated to your 2008 and 2009 Forms 1040, line 16b; Forms 1040A, line 12b; and Form 1040NR, line 17b. Also include the amount, if any, from your 2010 Form 8606, line 27, on Form 5329, line 2, and enter exception number 09.

If you entered amounts on your 2010 Form 8606, lines 20a and 20b, or 25a and 25b (for Roth IRA rollovers), see Additional Tax on Early Distributions in chapter 2 of Pub. 590 for the amount to enter on Form 5329, line 1.

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Note.(p3). Do not include any amounts attributable to in-plan Roth rollovers reported on your 2010 Form 8606, lines 22, 23, and 36. Also, if you were instructed to enter -0- on your 2010 Form 8606, line 27, for this purpose, figure any allocation for line 27 as if you entered your qualified first-homebuyer distributions on Form 8606, line 27.

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Example.(p3)

You converted $20,000 from a traditional IRA to a Roth IRA in 2006 and converted $10,000 in 2007. Your 2006 Form 8606 had $5,000 on line 17 and $15,000 on line 18 and your 2007 Form 8606 had $3,000 on line 17 and $7,000 on line 18. You made Roth IRA contributions of $2,000 for 2006 and 2007. You did not make any Roth IRA conversions or contributions for 2008 through 2010, or take any Roth IRA distributions before 2010.

On July 9, 2010, at age 53, you took a $33,000 distribution from your Roth IRA. Your 2010 Form 8606 shows $33,000 on line 26; $29,000 on line 30 ($33,000 minus $4,000 for your contributions on line 29) and $0 on line 36 ($29,000 minus your basis in conversions of $30,000).

First, $4,000 of the $33,000 is allocated to your 2010 Form 8606, line 29; then $15,000 to your 2006 Form 8606, line 18; $5,000 to your 2006 Form 8606, line 17; and $7,000 to your 2007 Form 8606, line 18. The remaining $2,000 is allocated to the $3,000 on your 2007 Form 8606, line 17. On line 1, enter $22,000 ($15,000 allocated to your 2006 Form 8606, line 18, plus the $7,000 that was allocated to your 2007 Form 8606, line 18).

If you take a Roth IRA distribution in 2011, the first $1,000 will be allocated to the $1,000 remaining from your 2007 Form 8606, line 17, and will not be subject to the additional tax on early distributions.

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For more details, see Are Distributions Taxable? in Pub. 590.

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The additional tax on early distributions does not apply to the distributions described below. Enter on line 2 the amount that can be excluded. In the space provided, enter the applicable exception number (01-12).

No. Exception
01	Qualified retirement plan distributions (does not apply to IRAs) you receive after separation from service in or after the year you reach age 55 (age 50 for qualified public safety employees).
02	Distributions made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from an employer plan, payments must begin after separation from service).
03	Distributions due to total and permanent disability.
04	Distributions due to death (does not apply to modified endowment contracts).
05	Qualified retirement plan distributions up to (1) the amount you paid for unreimbursed medical expenses during the year minus (2) 7.5% of your adjusted gross income for the year.
06	Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (does not apply to IRAs).
07	IRA distributions made to unemployed individuals for health insurance premiums.
08	IRA distributions made for higher education expenses.
09	IRA distributions made for purchase of a first home, up to $10,000.
10	Distributions due to an IRS levy on the qualified retirement plan.
11	Qualified distributions to reservists while serving on active duty for at least 180 days.
12	Other (see Other, below). Also, enter this code if more than one exception applies.

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The following exceptions also apply.

Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R. Include on line 2 the amount you received when you were age 591/2 or older.
Distributions from a section 457 plan, which are not from a rollover from a qualified retirement plan.
Distributions from a plan maintained by an employer if:
1. You separated from service by March 1, 1986;
2. As of March 1, 1986, your entire interest was in pay status under a written election that provides a specific schedule for distribution of your entire interest; and
3. The distribution is actually being made under the written election.
Distributions that are dividends paid with respect to stock described in section 404(k).
Distributions from annuity contracts to the extent that the distributions are allocable to the investment in the contract before August 14, 1982.

For additional exceptions that apply to annuities, see Pub. 575.

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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.

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Additional Information(p2)

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Specific Instructions(p2)

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Joint returns.(p2)

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Amended returns.(p2)

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Part I—Additional Tax on Early Distributions(p2)

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Line 1(p2)

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In-plan Roth Rollovers.(p2)

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Exception for Roth IRA Distributions(p2)

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Example.(p3)

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Additional information.(p3)

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Line 2(p3)

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Other.(p3)

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Line 4(p3)

taxmap/instr2/i5329-005.htm#TXMP7e46e67eAdditional Information(p2)

taxmap/instr2/i5329-005.htm#TXMP1fd955ffSpecific Instructions(p2)

taxmap/instr2/i5329-005.htm#TXMP65f6219fJoint returns.(p2)

taxmap/instr2/i5329-005.htm#TXMP1e8b2b14Amended returns.(p2)

taxmap/instr2/i5329-005.htm#TXMP4a3d973bPart I—Additional Tax on Early Distributions(p2)

taxmap/instr2/i5329-005.htm#TXMP0aea1b16Line 1(p2)

taxmap/instr2/i5329-005.htm#TXMP68e01a3aIn-plan Roth Rollovers.(p2)

taxmap/instr2/i5329-005.htm#TXMP0287fab9Exception for Roth IRA Distributions(p2)

taxmap/instr2/i5329-005.htm#TXMP3bdf6cb3Example.(p3)

taxmap/instr2/i5329-005.htm#TXMP15d262afAdditional information.(p3)

taxmap/instr2/i5329-005.htm#TXMP6c1cb550Line 2(p3)

taxmap/instr2/i5329-005.htm#TXMP34e05778Other.(p3)

taxmap/instr2/i5329-005.htm#TXMP7a80ef9bLine 4(p3)

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Additional Information(p2)

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Specific Instructions(p2)

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Joint returns.(p2)

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Amended returns.(p2)

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Part I—Additional Tax on Early Distributions(p2)

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Line 1(p2)

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In-plan Roth Rollovers.(p2)

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Exception for Roth IRA Distributions(p2)

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Example.(p3)

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Additional information.(p3)

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Line 2(p3)

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Other.(p3)

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Line 4(p3)