525

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.

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The-Tax-Lady
‎06-09-2022 05:08 PM
‎06-09-2022 05:08 PM

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.