You access Form 5329 (Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts) for a pension age exception by answering specific questions in the retirement section.
- Open or continue your return.
- Under Federal tab, Click on Wages & Income.
- Click on Show More next to Retirement Plans and Social Security, and then Click Revisit next to IRA, 401(k), 701(k) Information (1099-R).
- Proceed through the 1099-R screens until you reach "These Situations May Lower Your Tax Bill" or "Did you use your 1099-R o pay for any of these expenses?"
- Look for "Separation from Service the year during or after age 55" (or age 50 for public safety employees).
- Enter the amount of the distribution that qualifies for the exception; the program will then automatically generate Form 5329 with Exception Code 01.
Check Box 7 on your physical 1099-R.
If it has Code 2, the IRS already knows you have an exception; the program should handle it automatically and you might not even need Form 5329.
If it has Code 1, the IRS thinks it's an early distribution, and you must use Form 5329 to claim the age 55 exception to avoid the 10% penalty.
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