525

[#1]

The following diagnostic is generating:

When Form 5329 is suppressed the premature distribution penalty on Schedule 2, must be significant. Form 5329 must be present to support the exclusion from the Form 5329 penalty.

Solution:

If 5329 Reason for excluded amount and Amount excluded from 10%/25% tax are entered on Screen 13.1 the check-box to Suppress Form 5329 (filing not required) should not be checked on ANY of the 1099-R's entered on the same screen. Navigate to Income>13.1 Pensions, IRAs (1099-R). In the Form 5329 (Part I) uncheck To Suppress Form 5329 (filing not required) box.

[The-Tax-Lady]

It's giving you the option of including an exemption number on form 5329, if an exemption exists. If not, it's just an alert for the 10% early withdrawal penalty that will be charged on the tax return.