You don't need to file form 5329 if you make the withdrawal by the due date of your tax return, as you won't have an excess contribution. Since you don't have any earnings, you won't have to pay any tax or penalty. You should enter a substitute form 1099-R on your 2022 tax return to report the distribution that will be reported on your 2023 1099-R that you will receive in 2024. You make the following entry for a substitute Form 1099-R on your 2022 tax return. on your 2023 tax return, you will enter the Form 1099-R that you receive reporting the distribution, but it won't show as taxable on the return.
- Choose the Federal option on your left menu bar
- Choose Wages & Income
- Choose the Retirement Plans and Social Security menu option
- Choose IRA, 401(k), Pension Plan Withdrawals(1099-R)
- Choose the enter 1099-R option
- Choose Change how I enter my form
- Choose Type it in myself
- Choose Financial institution or other provider (1099-R)
- Enter in as much information as you can regarding the pension income
- Work through that section until you see Do any of these situations apply to you?
- Choose I need to file a substitute 1099-R
- Complete the information requested
Enter the distribution in box 1 and use code "8" in box 7.
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