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IRS.gov Website
Publication 17
taxmap/pub17/p17-055.htm#en_us_publink1000171868

Special Additional Taxes(p79)

rule
To discourage the use of pension funds for purposes other than normal retirement, the law imposes additional taxes on early distributions of those funds and on failures to withdraw the funds timely. Ordinarily, you will not be subject to these taxes if you roll over all early distributions you receive, as explained earlier, and begin drawing out the funds at a normal retirement age, in reasonable amounts over your life expectancy. These special additional taxes are the taxes on: These taxes are discussed in the following sections.
If you must pay either of these taxes, report them on Form 5329. However, you do not have to file Form 5329 if you owe only the tax on early distributions and your Form 1099-R correctly shows a "1" in box 7. Instead, enter 10% of the taxable part of the distribution on Form 1040, line 58 and write "No" under the heading "Other Taxes" to the left of line 58.
Even if you do not owe any of these taxes, you may have to complete Form 5329 and attach it to your Form 1040. This applies if you meet an exception to the tax on early distributions but box 7 of your Form 1099-R does not indicate an exception.
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Tax on Early Distributions(p79)

rule
Most distributions (both periodic and nonperiodic) from qualified retirement plans and nonqualified annuity contracts made to you before you reach age 591/2 are subject to an additional tax of 10%. This tax applies to the part of the distribution that you must include in gross income.
For this purpose, a qualified retirement plan is:
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5% rate on certain early distributions from deferred annuity contracts.(p79)

rule
If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. A 5% rate applies to distributions under a written election providing a specific schedule for the distribution of your interest in the contract if, as of March 1, 1986, you had begun receiving payments under the election. On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. Attach an explanation to your return.
taxmap/pub17/p17-055.htm#en_us_publink1000252685

Distributions from rollovers to Roth IRAs from eligible retirement plans within the 5-year period.(p79)

rule
If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from an eligible retirement plan to a Roth IRA, you take a distribution from the Roth IRA, you may have to pay the additional 10% tax on early distributions. You generally must pay the 10% additional tax on any amount attributable to the part of the rollover that you had to include in income. The additional tax is figured on Form 5329. For more information, see Form 5329 and its instructions. For information on qualified distribution from Roth IRAs, see Additional Tax on Early Distributions in chapter 2 of Publication 590.
taxmap/pub17/p17-055.htm#en_us_publink1000252593

Distributions from in-plan rollovers to designated Roth accounts within the 5-year period.(p79)

rule
If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from 401(k) or 403(b) plan to a designated Roth account, you take a distribution from the designated Roth account, you may have to pay the additional 10% tax on early distributions. You generally must pay the 10% additional tax on any amount attributable to the part of the in-plan rollover that you had to include in income. The additional tax is figured on Form 5329. For more information, see Form 5329 and its instructions. For information on qualified distributions from designated Roth accounts, see Designated Roth accounts under Taxation of Periodic Payments in Publication 575.
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Exceptions to tax.(p79)

rule
Certain early distributions are excepted from the early distribution tax. If the payer knows that an exception applies to your early distribution, distribution code "2," "3," or "4" should be shown in box 7 of your Form 1099-R and you do not have to report the distribution on Form 5329. If an exception applies but distribution code "1" (early distribution, no known exception) is shown in box 7, you must file Form 5329. Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329. On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions.
Deposit
If distribution code "1" is incorrectly shown on your Form 1099-R for a distribution received when you were age 591/2 or older, include that distribution on Form 5329. Enter exception number "12" on line 2.
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General exceptions.(p79)
The tax does not apply to distributions that are:
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Additional exceptions for qualified retirement plans.(p79)
The tax does not apply to distributions that are:
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Qualified public safety employees.(p80)
If you are a qualified public safety employee, distributions made from a governmental defined benefit pension plan are not subject to the additional tax on early distributions. You are a qualified public safety employee if you provide police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50.
taxmap/pub17/p17-055.htm#en_us_publink1000171876
Qualified reservist distributions.(p80)
A qualified reservist distribution is not subject to the additional tax on early distributions. A qualified reservist distribution is a distribution (a) from elective deferrals under a section 401(k) or 403(b) plan, or a similar arrangement, (b) to an individual ordered or called to active duty (because he or she is a member of a reserve component) for a period of more than 179 days or for an indefinite period, and (c) made during the period beginning on the date of the order or call and ending at the close of the active duty period. You must have been ordered or called to active duty after September 11, 2001. For more information, see Publication 575.
taxmap/pub17/p17-055.htm#en_us_publink1000171877
Additional exceptions for nonqualified annuity contracts.(p80)
The tax does not apply to distributions from:
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Tax on Excess Accumulation(p80)

rule
To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date (defined later). The payments each year cannot be less than the required minimum distribution.
taxmap/pub17/p17-055.htm#en_us_publink1000171879
Required distributions not made.(p80)
If the actual distributions to you in any year are less than the minimum required distribution for that year, you are subject to an additional tax. The tax equals 50% of the part of the required minimum distribution that was not distributed.
For this purpose, a qualified retirement plan includes:
taxmap/pub17/p17-055.htm#en_us_publink1000171880

Waiver.(p80)

rule
The tax may be waived if you establish that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. See the instructions for Form 5329 for the procedure to follow if you believe you qualify for a waiver of this tax.
taxmap/pub17/p17-055.htm#en_us_publink1000234401
State insurer delinquency proceedings.(p80)
You might not receive the minimum distribution because assets are invested in a contract issued by an insurance company in state insurer delinquency proceedings. If your payments are reduced below the minimum due to these proceedings, you should contact your plan administrator. Under certain conditions, you will not have to pay the 50% excise tax.
taxmap/pub17/p17-055.htm#en_us_publink1000171881

Required beginning date.(p80)

rule
Unless the rule for 5% owners applies, you generally must begin to receive distributions from your qualified retirement plan by April 1 of the year that follows the later of: However, your plan may require you to begin to receive distributions by April 1 of the year that follows the year in which you reach age 701/2, even if you have not retired.
taxmap/pub17/p17-055.htm#en_us_publink1000171883
5% owners.(p80)
If you are a 5% owner, you must begin to receive distributions by April 1 of the year that follows the calendar year in which you reach age 701/2.
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Age 701/2.(p80)

rule
You reach age 701/2 on the date that is 6 calendar months after the date of your 70th birthday.
For example, if you are retired and your 70th birthday was on June 30, 2010, you were age 701/2 on December 30, 2010. If your 70th birthday was on July 1, 2010, you reached age 701/2 on January 1, 2011.
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Required distributions.(p80)

rule
By the required beginning date, as explained earlier, you must either:
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Additional information.(p80)
For more information on this rule, see Tax on Excess Accumulation in Publication 575.
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Form 5329.(p80)
You must file Form 5329 if you owe tax because you did not receive a minimum required distribution from your qualified retirement plan.