How do i file a form 5329?

[BillM223]

TurboTax generates the 5329 if it discovers that you owe extra tax on a variety of situations, such as excess contributions to an HSA, early distributions from a retirement plan, failure to distribute Required Minimum Distributions, and so on.

Then TurboTax attaches the form to your return.

[minipele8]

@BillM223  Is there a way to view or confirm that the 5329 is added to my return? I had to remove excess contributions from my Roth IRA, but not sure where to put this info so TurboTax knows that I owe extra taxes/penalties.

[DavidD66]

You can review your Form 1040, and see if any tax from Form 5329 is showing up on Schedule 2, line 6.  To view your Form 1040, while logged in to your return:

• Click on "Tax Tools" on the left of your screen
• Click "Tools" from the drop down menu
• Click on "View Tax Summary"
• Click on "Preview my 1040" on the left hand side of screen

[minipele8]

Awesome, thanks so much! I assume if there is a value in that field, then the 5329 form will automatically be attached to my return?

[BillM223]

Yes, TurboTax will attach the 5329 if it is required (as David and the text on line 6 on Schedule 2 say).

[Marty20]

I just found out that I contributed an excess of $547 into my 401k in 2019. I had 2 employers using 2 different brokers to manage 401k (Vanguard & Fidelity)  Unfortunately, I'm no longer with either employer and I closed my 401k plans, rolled over 100% of the funds to IRA and consolidated all the money with a separate broker. r. I've been on the phone all day calling and explaining the situation and it's taking too much time and effort and each broker is pointing his finger at the other one to generate 1099R to fix the problem. I rather pay the 6% penalty and get over with this dilemma.  Turbo Tax informed me about the excessive amount and how to fix it (1099R) but I don't want to deal with the 1099R headache of fixing this problem for the next 2 years (principal & earnings calculations, etc.).  How can I force Turbo Tax to generate a 5329 and pay the penalty and get over with this complicated matter? I'm assuming it's a one time penalty on the $547 which is about $33? Right? Thanks!

[macuser_22]

An excess deferral in a 401(k) CANNOT be remedied with a 5329 form.    Because you failed to request a return of the excess before April 15 and because it is no longer possible for the 401(k) plan to return the excess, you will have to report that excess as taxable income on the 2019 1040 form line 1 as if it has been returned.  

Since you rolled to to an IRA (Traditional I assume) you will have to pay tax on  that money again when finally withdrawn.   That double tax is the penalty for not properly removing the excess from the 401(k) plan in the proper method in the time allowed.

Without a 1099-R, TurboTax has a special way to do report it.

Excess 401(k) deferrals should be reported in:
(There are several screens to click through to get to the right place)

Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.

This will add the returned excess to your 2019 wages on line 1 on the 1040 form.

[Marty20]

Thank you for your response. According to Turbo Tax, the new deadline for requesting/receiving the excess contribution is July 15, 2020. So technically I still have time to request the money back. It gets a little bit complicated since the 401k funds got rolled over to a traditional IRA account. Can I ask the brokerage firm to withdraw the excess from my IRA? And eventually calculate the earning/loss on the excess for next year's return.

Should I follow your method below to report the $547 excess 401k contribution which will be added to my wages & salaries (1040 line 1)? Thanks!

[macuser_22]

---

@Marty20 wrote:

Thank you for your response. According to Turbo Tax, the new deadline for requesting/receiving the excess contribution is July 15, 2020.

---

Please point me to where it says that.    The date to file a tax return was changed to July 15, but I have not seen anything in the tax law or IRS regulations that changed the date that the excess must be removed by.   Removing an excess contribution is not the same as filing a tax return.   

For information see IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf

the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year,

In any event, it not possible to get "money back" from an account that no longer exists.

[Marty20]

Please see attached screenshot about the deadline to withdraw the excessive 401k/Trad IRA distribution.

Recap: 

I just found out through Turbotax that I contributed an excess of $547 into my 401k in 2019. I have been trying to solve the problem in the last 24 hours with the brokerage firm and employers over the phone but they seemed confused, unhelpful and trying to point fingers at each other. What’s the best way to proceed and fix this problem prior to the July 15 Tax Day? I followed the steps mentioned in the following blog where I reported the $547 amount as an income: "2019 Excess 401K Deferrals" https://ttlc.intuit.com/community/state-taxes/discussion/steps-to-take-to-remove-an-excess-salary-de....

Is this the best solution? Should the brokerage firm send me a check for the excessive contribution amount ($547) prior to July 15 per Turbotax (see attached screenshot) to close the loop and then send me 1099-R for the principal and another one for the earnings? Can they take the money from my IRA account since I no longer have 401k account?

Background info: I separated from company A on December 31, 2018. They payed me for the last week of December in early January (pay period 12/22/18 to 01/04/2019). I’m not sure why they included a 2019 401k contribution of $547. I already maxed out my 2018 401k contribution. I rolled over company A 401k funds to a traditional IRA plan sometimes in 2019 with the same brokerage firm.

In February 2019, I started a new job with company B. I contributed to a new 401k plan and maxed out my contribution. I also separated from company B and rolled over my 401k to an IRA plan last month.

[macuser_22]

The IRS says April 15.  I know of no IRS ruling that the July 15 due date applies to excess salary deferrals removal.

 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-what-happens-when-a...

But that is a moot point because as  I already said a 401(k) excess can ONLY be returned by the 401(K) pan trustee and that not not possible if the 401(k) plan no longer exists.    You cannot satisfy an excess salary deferral with an IRA distribution.  In IRA is NOT a 401(k).   What is done is done.   

It makes little difference since the amount is only $557 and that must be added to your 2019 income whether removed or not.     The ONLY tax difference is when finally distributed from the IRA you will pay tax at your margional tax rate on that distribution but if the IRA is for retirement and invested then the earnings on that $547 over years, could exceed the tax so it might actuall be a benefit to you.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-what-happens-when-a...

[Marty20]

Thanks again for your answer and clarification. Just to summarize my actions for 2019 taxes, I should go ahead and add the excessive 401k contribution to my 1040 income and do nothing else.

- No need to request distribution of the $547 from my IRA and receive 1099-R for 2019

- No need to do the calculation of the earnings and receive a 1099-R for 2020

- No need to file form 5329

- I will end up paying taxes on the $547 again when I start withdrawing money from my IRA at retirement age.

Thanks!

[macuser_22]

Correct.  Just enter it as I posted above.   Nothing else needs to be done.

Excess Salary deferrals are not  reported on a 5329 form.

[sdoran]

Hi,

You sounds knoweldgable on this! 

Excess contributions in 2017,18,19 to an IRA. Didn't know the money was going in there, and the contributions were NOT deducted on my taxes.

Can I send in a 5329 for each of those years with this years taxes and see if they request a 1099x for previous years?  Can't find info on this anywhere!