What IRS Form 5329 exception do I list for a Roth IRA early withdrawal? The withdrawal was only principal contributions (not earnings) - should be no penalty, no tax.

[dmertz · Accepted solution]

None.  It's not reportable on Form 5329 at all.

Nonqualified distributions must be reported on Form 8606 Part III, which TurboTax does automatically when you enter the Form 1099-R and you answer the follow-up questions, including those that TurboTax presents after you click the Continue button on the Your 1099-R Entries page, resulting in the calculation of the taxable amount.  Since the distribution consists only of original contributions, the result is that none for the distribution is taxable.  Since early-distribution penalty's only apply to taxable amounts (other than nonqualified distributions of taxable conversions before the 5-year holding period has been completed), there is no penalty reported on Form 5329 and therefore no need for a penalty exception.