Client withdrew 26,000 from a traditional IRA for first time home buyer purchased , distribution code says 1 on the 1099-R, in order to avoid the penalty it should be J. Is it that to avoid the penalty the distribution needed to be from a Roth IRA ?

Forum|Forum|6 years ago
June 17, 2020
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ProSeries Basic

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Best answer by Just-Lisa-Now-

Im using Professional, not Basic, so Im not sure how different our screens are....but this is what my 5329 looks like. I just enter the dollar amount into the smart worksheet and it inserts the code 9 automatically

Just-Lisa-Now-

Intuit Community Champion

Re: Client withdrew 26,000 from a traditional IRA for first time home buyer purchased , distribution code says 1 on the 1099-R, in order to avoid the penalty it should be J. Is it that to avoid the penalty the distribution needed to be from a Roth IRA ?

No, Code 1 is probably correct for a traditional IRA if hes under 59½ years old.

The 26K is still taxable income, its just the penalty on 10K of it that you can get waived. The penalty waiver is done on Form 5329.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

C

Co180Author

Level 2

Thank you Lisa! I have been trying to enter the exception number "9" on form 5329 but is not letting me ..... am I missing something that I need to do on the 1099-R so that the number "9" flows to form 5329?