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Understanding Lacerte diagnostic ref. 526 - Include distribution on Form 5329

by Lacerte Tax 2023 Updated 7 months ago

The following informational diagnostic is generating in the Individual module of Lacerte:

  • Pensions, IRA #X: This distribution may need to be included on the taxpayer's Form 5329 and subjected to early retirement distribution tax if it was made prior to reaching age 59 1/2, unless an exception is met. Ref #526

How do I resolve this diagnostic?

This diagnostic is informational only. It generates to alert you that Form 5329 may be required for the return. It generates when you enter a pension or IRA distribution on Screen 13 with code 8, code B, or code L.

Refer to the IRS Instructions for Form 5329 to determine whether the form is required.

Follow these steps to clear this diagnostic:

  1. Go to Screen 13.1, Pensions, IRAs (1099-R).
  2. Select Form 5329 (Part I) from the lower-left Sections box.
  3. If Form 5329 is required, enter the applicable number in Early distribution tax 1=10%, 2=25% (SIMPLE), 3=suppress [O].
  4. If Form 5329 isn't required, check the box to Suppress Form 5329 (filing not required).
Lacerte Tax

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