5329-S and 5329-T errors

3 replies
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Whenever I attempt to file my return I keep getting 4 errors for 5239-S and 5329-T. I have no excess contributions or early withdrawals and no associated 1099-Rs imputed or selected.

TurboTax Self Employed Online

linaj20201

Alumni - Intuit

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Form 5329

Thank You for your patience

If you take a distribution from a retirement plan including IRA account before age 59 1/2, you must pay the 10% additional tax on the amount you withdrew. However, if you qualify for an exception on Form 5329, you do not need to pay. Due to the Section 2202 CARES Act, if your distribution is related the Covid-19, you will not be liable for this additional penalty. For more information from the IRS, click here: Covid Relief. If your distribution is not related to the Covid, you will need to pay the penalty.

MY2K

Level 2

TurboTax Deluxe desktop generates a Form 5329-T for payments from a NONQUALIFIED annuity that I purchased and annuitized in 2023. (There was no Form 5329 in 2023 TurboTax Deluxe desktop.) Now in 2024 TurboTax Deluxe desktop, Form 5329-T (Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts) is created and shows pre-populated exception 12 ("distribution incorrectly indicated as early distribution...Include on line 2 the amount you received when you were are 59 1/2 or older.") The amount on line 2 is the GROSS distribution in 2024, not the TAXABLE AMOUNT shown on line 2 in Form 1099-R from the insurance company that sold me the annuity. The 1099-R form shows 7D in line 7 distribution code ("annuity payments from nonqualified annuities"). (The TurboTax forms library for my 2024 1040-SR shows Form 5329-T with the GROSS distribution amount and only exception 12).

1. Can the TurboTax Deluxe Desktop software be updated/corrected so that Form 5329-T is generated by TurboTax since the 2024 distributions (a) were regular monthly payments (exception 2 should apply-"distributions made as part of a series of substantially equal periodic payments", (b) were NOT early distributions, and (c) the nonqualified annuity is not a "tax-favored retirement plan? Other software error: IRS instructions for Form 5329 indicate code 99 ("enter this exception if more than one exception applies") but TurboTax does not allow me to change the pre-populated code 12 if more than one exception applies, i.e., Exception 02-"substantially equal periodic payments" and Exception 12-"distributions incorrectly indicated as early distributions).

2. Can Form 5329-T be deleted and not filed with Form 1040-SR with IRS either electronically?

AmyC

Alumni - Intuit

1. Let's get your forms entered without a penalty. Last year the questions were very different.

2. It can't be deleted until we fix the issue. Let's get you filed without the penalty form 2210.

The nonqualified annuity entry:

Open your return to the federal income
Select the 1099-R and edit
taxable amount -if box 2a has no amount or needs to be determined, the program will ask about cost basis. Since 2a has the correct number- you select to use it, the program will not ask about the basis.
continue to Enter the form,
No Public Safety Officer
select 403b plan
RMD, enter zero
continue

@MY2K

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