Distributions from retirement plans. Paid penalties in 2017. The penalties were more than distributions were. But, it makes our taxes higher now even though its paid for?

scythia23 · ‎June 1, 2019

Had a 401k with a previous employer. Switched jobs and did not switch 401k to new employer. Old 401k auto closed and distributed in 2016. had to pay penalties in 2017 but I have a new 401k which I make contributions to with employment check. Since the penalties are paid do I need to input my 1099-R from 2017? (did not receive a 1099-R for 2018)

Vanessa · ‎June 1, 2019

Did you receive any of this money in 2018?

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holyangel98 · ‎June 1, 2019

No we did not. The closed 401k account distributed everything it had in 2016. and again we paid penalties in 2017

macuser_22 · ‎June 1, 2019

Where do you see penalties for 2018? Is there a 5329 form - if so what line is the penalty on?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

holyangel98 · ‎June 1, 2019

No, we do not have 5329 as far as our records go. H&R filled a 8880

Vanessa · ‎June 1, 2019

If you didn't receive any of the money in 2018, you will not report it on your 2018 return.

If you did not report this income on your 2017 return you will need to Amend Your Return for 2017. Income is reported in the year it is received. If you did include it on your 2017 return, then you do not need to do anything at all with it.

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holyangel98 · ‎June 1, 2019

Does form 8880 replace form 5329? for a 1099-R? We have a Form 8880. If so, yes we did.

macuser_22 · ‎June 1, 2019

No. 8880 is a credit for retirement savings. The 5329 is penalties. Your question refers to 2017 penalties and you said it is making your 2018 taxes higher - what are you seeing that is doing that?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

scythia23 · ‎June 1, 2019

Distributions from retirement plans. then it asks about the following years.
2015-2016 = no
2017 = yes (which makes our tax go up, but its paid for.)
2018 = no
2019 = no
ABLE account distributions = no

macuser_22 · ‎June 1, 2019

That is just to calculate the amount of savers credit you qualify for. It is not making the tax higher, it is reducing the amount of the credit that lowers the tax. When you enter the distribution then there is less credit to reduce the tax.

Past years distributions will reduce the credit. See the 8880 form instructions:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f8880.pdf">https://www.irs.gov/pub/irs-pdf/f8880.pdf</a>

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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Distributions from retirement plans. Paid penalties in 2017. The penalties were more than distributions were. But, it makes our taxes higher now even though its paid for?