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General Instructions

Table of Contents

What's New

Waiver of required minimum distributions for 2009.    For 2009, you are not required to take a minimum distribution from your defined contribution plan or IRA. For more information, see Waiver of required minimum distributions for 2009 on page 6.

Purpose of Form

Use Form 5329 to report additional taxes on:

  • IRAs,

  • Other qualified retirement plans,

  • Modified endowment contracts,

  • Coverdell ESAs,

  • QTPs,

  • Archer MSAs, or

  • HSAs.

Who Must File

You must file Form 5329 if any of the following apply, except you do not have to file Form 5329 to report a qualified disaster recovery assistance distribution.

Note.

You do not have to file Form 5329 if distribution code 1 is correctly shown in box 7 of all Forms 1099-R and you owe the additional tax on each Form 1099-R. Instead, see the instructions for Form 1040, line 58, or Form 1040NR, line 54, for how to report the additional 10% tax directly on that line.

  • You received an early distribution from a Roth IRA, the amount on line 23 of Form 8606, Nondeductible IRAs, is more than zero, and you are required to enter an amount that is more than zero on Form 5329, line 1 (see Exception for Roth IRA Distributions on page 2).

  • You received an early distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA) and distribution code 1 is not shown in box 7 of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

  • You meet an exception to the tax on early distributions and distribution code 1 is shown in box 7 of Form 1099-R.

  • You meet an exception to the tax on early distributions from the list on page 3 but box 7 of your Form 1099-R does not indicate an exception or the exception does not apply to the entire distribution.

  • You received taxable distributions from Coverdell ESAs or QTPs.

  • The contributions for 2009 to your traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, or HSAs exceed your maximum contribution limit, or you had a tax due from an excess contribution on line 17, 25, 33, 41, or 49 of your 2008 Form 5329.

  • You did not receive the minimum required distribution from your qualified retirement plan. However, for 2009, you are not required to take a minimum distribution from your defined contribution plan or IRA. See Waiver of required minimum distributions for 2009 on page 6 for more information.

If you rolled over part or all of a distribution from a qualified retirement plan, the part rolled over is not subject to the additional tax on early distributions. See the instructions for Form 1040, lines 15a and 15b or lines 16a and 16b; Form 1040A, lines 11a and 11b or 12a and 12b; or Form 1040NR, lines 16a and 16b or 17a and 17b, for how to report the rollover.

When and Where To File

File Form 5329 with your 2009 Form 1040 or Form 1040NR by the due date, including extensions, of your Form 1040 or Form 1040NR.

If you do not have to file a 2009 income tax return, complete and file Form 5329 by itself at the time and place you would be required to file Form 1040 or Form 1040NR. Be sure to include your address on page 1 and your signature and the date on page 2. Enclose, but do not attach, a check or money order payable to “United States Treasury” for any taxes due. Write your SSN and “2009 Form 5329” on the check. For information on other payment options, including credit or debit card payments, see the instructions for Form 1040 or Form 1040NR, or go to www.irs.gov.

Prior tax years.   If you are filing Form 5329 for a prior year, you must use that year's version of the form. If you do not have other changes and have not previously filed a federal income tax return for that year, file Form 5329 by itself (discussed earlier). If you have other changes, file Form 5329 for that year with Form 1040X, Amended U.S. Individual Income Tax Return.

Definitions

Qualified retirement plan.   A qualified retirement plan includes:

  • A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan),

  • A tax-sheltered annuity contract,

  • A qualified annuity plan, and

  • An IRA.

  For purposes of the additional tax on early distributions, an eligible governmental section 457 deferred compensation plan is treated as a qualified retirement plan, but only to the extent that a distribution is attributable to an amount transferred from a qualified retirement plan (defined above).

Note.

Modified endowment contracts are not qualified retirement plans.

Traditional IRAs.   For purposes of Form 5329, a traditional IRA is any IRA, including a simplified employee pension (SEP) IRA, other than a SIMPLE IRA or Roth IRA.

Early distribution.   Generally, any distribution from your IRA, other qualified retirement plan, or modified endowment contract before you reach age 59½ is an early distribution.

Rollover.   Generally, a rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan. Generally, you must complete the rollover within 60 days of receiving the distribution. Any taxable amount not rolled over must be included in income and may be subject to the additional tax on early distributions.

  You can roll over (convert) amounts from a qualified retirement plan to a Roth IRA. Any amount rolled over to a Roth IRA is subject to the same rules for converting a traditional IRA to a Roth IRA. You must include in your gross income distributions from a qualified retirement plan that you would have had to include in income if you had not rolled them into a Roth IRA. Generally, the 10% tax on early distributions does not apply. For more information, see Rollover From Employer's Plan Into a Roth IRA in chapter 2 of Pub. 590.

  The IRS may waive the 60-day requirement if failing to waive it would be against equity or good conscience, such as situations where a casualty, disaster, or other events beyond your reasonable control prevented you from meeting the 60-day requirement. Also, the 60-day period may be extended if you had a frozen deposit. See Pub. 590 for details.

Compensation.   Compensation includes wages, salaries, tips, bonuses, and other pay you receive for services you perform. It also includes sales commissions, commissions on insurance premiums, and pay based on a percentage of profits. It includes net earnings from self-employment, but only for a trade or business in which your personal services are a material income-producing factor.

  For IRAs, treat nontaxable combat pay and any differential wage payments, and all taxable alimony received under a decree of divorce or separate maintenance as compensation.

  Compensation does not include any amounts received as a pension or annuity and does not include any amount received as deferred compensation.

  Taxable compensation is your compensation that is included in gross income reduced by any deductions on Form 1040, lines 27 and 28, or on Form 1040NR, line 27, but not by any loss from self-employment.

Additional Information

See Pub. 590; Pub. 560, Retirement Plans for Small Business; Pub. 575; Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans; Pub. 970, Tax Benefits for Education; and Pub. 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.

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