topic Re: Form 5329, line 2 code 12 in Retirement tax questions

Form 5329, line 2 code 12

humblebumble100 — Fri, 07 Jun 2019 23:16:10 GMT

form 5329, line 2. My 2016 tax return had code 12 on it , although I have been using the SEPP checked when turbo tax prompted. Question is shouln't it be code 2 and not 12. Will it cause a problem with the irs?

It depends what the reason for the exception was. The cod...

Coleen3 — Fri, 07 Jun 2019 23:16:13 GMT

It depends what the reason for the exception was. The codes are below. Code 12 is other.

Exception 01 Qualified retirement plan distributions (does not apply to IRAs) you receive after separation from service when the separation from service occurs in or after the year you reach age 55 (age 50 for qualified public safety employees).

02 Distributions made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from an employer plan, payments must begin after separation from service).

03 Distributions due to total and permanent disability. You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A medical determination that your condition can be expected to result in death or to be of long, continued, and indefinite duration must be made.

04 Distributions due to death (does not apply to modified endowment contracts).

05 Qualified retirement plan distributions up to the amount you paid for unreimbursed medical expenses during the year minus 10% (or 7.5% if you or your spouse were born before January 2, 1952) of your adjusted gross income (AGI) for the year.

06 Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (does not apply to IRAs).

07 IRA distributions made to certain unemployed individuals for health insurance premiums.

08 IRA distributions made for qualified higher education expenses.

09 IRA distributions made for the purchase of a first home, up to $10,000.

10 Qualified retirement plan distributions made due to an IRS levy.

11 Qualified distributions to reservists while serving on active duty for at least 180 days.

12 Other (see Other next). Also, enter this code if more than one exception applies.

Re: Form 5329, line 2 code 12

Mommyof3 — Mon, 08 Feb 2021 22:27:53 GMT

Hello I have the same as you that is normal when you taken a hardship withdrawl from 401k. When 1099-r box 7 says 1 it gives us the few reason listed for why we took it but never the one we need when its hardship for eviction etc. So you will be fine last year my taxes was just that and everything was smooth. I got two 1099-r this year one for the hardship which gave that code 1 in box 7 and the second 1099-r box 7 is code 2 which is for the pandemic relief withdrawl. So im sitting on idle till I can get a 8915-E form to finish mine.

Re: Form 5329, line 2 code 12

dmertz — Mon, 08 Feb 2021 23:45:22 GMT

General hardship is not an exception to the early-distribution penalty. The permissible penalty exceptions are for specific circumstances that created a hardship, not the hardship itself. You are not permitted to claim a code 12 Other reason exception to the penalty just because you needed the money, it has to be for one of the explicitly allows exceptions listed for code 12 in the Instructions for Form 5329:

https://www.irs.gov/pub/irs-pdf/i5329.pdf

Re: Form 5329, line 2 code 12

Mommyof3 — Tue, 09 Feb 2021 16:29:41 GMT

You know I think we figured that before requesting a hardship and yes certain financial hardship is exempt from the penalty it just makes confusing when it uses code 12 generic other. You report excalty what your 1099R says and no cant change codes etc but enter it correctly most times we still get the code 12 cause turbo software doesn't list all the reasons for withdrawal. Asthe paperwork you filed to requesting hardship withdrawal explains this. Keep all receipts and records showing that you used every dollar amout just for that hardship