Form 5329 Lines 2 and Line 4 are not calculated correctly. What should I do as a workaround for this miscalculation?

[piano5353]

Line 4 incorrectly shows a penalty assessed.  Likewise, an entry appears in Part I Additional Tax on Early Distributions on line A, column A but there should be no entry there because there was no early distribution taken.  Unable to find the source of this entry, I tried to clear the form by deleting my original entries in the Easy Entry income Retirement Plan section but the form entries do not change to zero.  Likewise, Line 2 shows an entry for an RMD taken.  There should be no penalty because the RMD was not taken early, there was no excess amount included in the RMD, and the age requirement was met. When I deleted the initial entry data for the RMD from Turbo Tax via Easy Step entry, Line 2 does not revert to zero  Instead, it continues to show the RMD amount that I deleted. How is it possible that Line 2 retains deleted data?  Is there a workaround to these miscalculations?

[TerryA · Accepted solution]

The data for Form 5329 comes from Form(s) 1099-R. On one or more of those you may have inadvertently indicated that it was an early distribution. Please review those entries. If you are 59 1/2 or over then there should be no penalty.

[piano5353]

An early distribution box was inadvertently marked incorrectly.  Thank you so much.

[jimheiner]

I have a similar problem for Tax Year 2019 but I cannot find an "early distribution box" on any of my1099-R forms.  Where do you find such a box?

[DavidD66]

It is not a check box, it is the distribution codes in Box 7 of Form 1099-R.  If Code 1 is used, it will be treated as an early withdrawal and subject to the 10% penalty.  If it is a rollover, there is additional information that has to be entered indicating the distribution was handled, otherwise it will be treated as an early withdrawal subject to tax and the 10% penalty.  I suggest you revisit the 1099 entry section and ensure you have properly input all information.