Form 5329 Included for Early Distribution Erroneous

Please note that you may be required to file the 5329, even if you can provide an exception to the penalty.

"You must file form 5329 if any of the following apply:"

You received a distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA) and you meet an exception to the tax on early distributions from the list shown later, but box 7 of your Form 1099-R doesn’t indicate an exception or the exception doesn’t apply to the entire distribution.

So if your early distribution penalties were waived, you should still have the exception code on line 2 to the left of the number column. Is that the case?

Thanks for your response.  The situation described in your reply does not fit my situation since my distributions are not early distributions subject to the tax.  I am over 70 and have been taking distributions from my  IRA and Pension for years.  I believe there is a bug in the TurboTax program. 

Then I would go back and check your birthdate under My Info or Personal info.  Are you married?  Is your spouse younger than 59 1/2?

There are a couple bugs with 1099R.   Mainly about the RMD.  Do you need to take the RMD?  Could be this…..

Tax on excess accumulations.   That’s because Turbo Tax thinks you didn’t take the full RMD from all your accounts.

Turbo Tax changed this year. When it asks about the RMD it is only asking for that one 1099R. You need to enter the amount in box 1 on that 1099R for the RMD, not the total RMD for all.

Thanks for reply on RMD issues.  My personal info is correct regarding age and I am not subject to taking an RMD yet.

Ah, my mistake. Exception 12 states: "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 59½ or older."

So I see that you had a distribution code of 1 - was true on every 1099 form you had? Maybe one had a 1, J, or S?

OK, do you have a Schedule 2 on your return? Is there an entry on line 8? For that matter, is there an entry on line 4 of your 5329? It may be not enough to just delete the 5329 (which you can do if you wish) but not if there is an entry on line 8 on Schedule 2.

All distributions are 7-Normal Distribution.  I do not have a Schedule 2.  Thanks for taking a close look at this issue.  I will likely delete Forms 5329 before filing.

Did you find a resolution to this?  I have the same thing happening with my parents taxes for their CSA 1099Rs.  The only difference between those and the 1099Rs from their IRAS is that the box for IRA/SEP/SIMPLE is not checked (or not there at all) on the 1099Rs for which TT is generating a 5329 with the box "incorrect early distribution" filled out with the amount of their distribution.  I don't see what I can change in TT to keep these forms from generating.  They are both over the required age and not taking an early distribution.  It didn't do this in previous years either.

Hi ampalo.  I just deleted Form 5329 in quicken's form mode before filing.

Thanks for the reply.  I am planning to delete also, particularly since the form doesn't calculate anything additional, and it seems to be an error since all the Box 7s on the 1099s only have "7" in the code and no letters or #s that would generate the exception as noted in the IRS instructions.  I may pose this question separately to the community again but it does seem to be an error within TT.  Thanks.