That doesnt make sense to me. I been monitoring the changes TT makes to Form 5329 (Additional Taxes on Qualified Plans). If you put the 1200 contribution in the corrective distro box then that is greater than the gain/earnings, which defeats the logic:
Line 1 form 5329: Early distro includible in income . For Roth IRA distros.
- for me lets say for simplicity that is 100 (gain/earnings)
Line 2 form 5329: Early distros included in line 1 that are not subject to additional tax.
- whatever you put in Corrective Distro gets added here. Herein lies the problem. Logic says this this line has to be < line 1. I can see where AnnetteB6 said to put the gain/earning there but only if I was => 59-1/2.
Beings that I am < 59-1/2, the form works if I just leave Corrective Distro blank and don't enter anything when prompted, "Did you use your IRA to pay for any of these expenses?" screen. By not inputting anything here TT from the 1099R I created: 1-Full distribution (contribution+earnings), 2a-earnings only, with PJ code picks up the earnings as taxable in form 5329. Seem whatever I put in Corrective Distro impacts what is subject to 10% penalty and each or our earning are in fact subject as I stated b/c we are < 59-1/2.
Does that make sense?
That is why I am unclear on the Corrective Distro box. In my case it seems I should leave blank, therefore TT assigns my gain/earnings to be penalized as they should be. But if I put earnings in the box, the gain/earnings are excluded from the penalty, which is wrong.
Thanks in advance.
