The IRS on Jan. 21 issued the instructions for the Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts to be used in reporting concerning benefits and distributions from 2018. Employers, plan administrators and retirement plan professionals may find it a worthwhile service to remind plan participants and recipients of benefits and distributions that they may be required to file the form, and to inform them that it has been updated.
The Form 5329 is used to report additional taxes on a variety of benefits, including IRAs, health savings accounts (HSAs) and other qualified retirement plan benefits.
Among those who must file the Form 5329 are those who:
1. Received a distribution from a Roth IRA and either the amount on line 25c of Form 8606, Nondeductible IRAs, is more than zero, or received a distribution that includes a recapture amount subject to the 10% additional tax, or it’s a qualified first-time homebuyer distribution.
2. Received a distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA). However, if distribution code 1 is correctly shown in box 7 of all Forms 1099-R, and the additional tax on each Form 1099-R is owed, the Form 5329 does not have to be filed.
3. Received a distribution subject to the tax on early distributions from a qualified retirement plan (other than a Roth IRA), and the taxpayer qualifies for an exception to the tax on early distributions, but box 7 of the Form 1099-R doesn’t indicate an exception or the exception doesn’t apply to the entire distribution.
4. Had contributions for 2018 to a traditional IRA, Roth IRA, Coverdell ESAs, Archer MSA, HSA, or ABLE account that exceeded the maximum contribution limit, or from whom there was tax due from an excess contribution on line 17, 25, 33, 41, or 49 of your 2017 Form 5329; and
5. Did not receive the minimum required distribution from a qualified retirement plan, including trusts and estates that didn’t receive this amount.
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