Common questions about Form 5329 Retirement Plan Taxes in Lacerte

In this article, you'll find answers to frequently asked questions on Retirement Plan Taxes (Form 5329).

What's new for Form 5329 for tax year 2023:

• Certain corrective distributions not subject to 10% early distribution tax. Beginning on December 29, 2022, the 10% additional tax on early distributions will not apply to a corrective IRA distribution, which consists of an excessive contribution (a contribution greater than the IRA contribution limit) and any earnings allocable to the excessive contribution, as long as the corrective distribution is made on or before the due date (including extensions) of the income tax return
• Qualified disaster distributions. The additional tax on early distributions doesn't apply to qualified disaster distributions nor does it apply to qualified disaster recovery distributions. See Publication 590-B for more details.
• Maximum age for traditional IRA contributions. The age restrictions for contributions to a traditional IRA has been eliminated.

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Table of contents:

How do I enter excess contributions on Form 5329, line 15?

1. Go to Screen 41.1, Retirement Plan Taxes (5329).
2. In the Section List to the lower-left, select the Excess Contributions to Traditional IRA section.
3. Enter the amount in 2023 excess contributions.

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How do I enter a Roth IRA distribution so it is subject to the additional 10% tax on Form 5329?

Distributions from a Roth IRA are generally nontaxable. However, when a taxpayer converts basis from a Traditional IRA to a Roth IRA, the amount is taxable over a certain period after the conversion.

To enter a Roth IRA distribution with code J that is subject to the additional 10% tax, as calculated on the Form 5329:

1. Go to Screen 13.1, Pensions, IRAs.
2. Enter the Name of payer.
3. Open the Distribution code #1 dropdown menu.
4. Select distribution code J from the dropdown list.
5. Mark the checkbox for IRA/SEP/SIMPLE.
6. Enter the Gross Distribution amount.
7. Navigate to Screen 24, Adjustments to Income.
8. Locate the Roth IRA section.
9. Enter in the Basis in Roth IRA conversions as of 12/31/23.
10. Navigate to Screen 41, Retirement Plan Taxes.
11. Select Early Roth Distributions (5329) from the left navigation panel.
12. Enter the Year of distribution or conversion.
13. Enter the Taxable amount of conversion.

Should the Roth IRA already have a basis when the prior year conversion took place, enter the amount of that basis in Screen 41.2, Early Roth Distributions in the field Basis in conversion.

The above entries will prompt Lacerte to generate Form 8606 and Form 5239.

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How do I generate Form 5329, Part III?

1. Go to Screen 41, Retirement Plan Taxes.
2. Locate the Excess Contribution to Traditional IRA section.
3. Enter the Maximum contribution allowable less contribution made.
4. Enter the excess contribution made in 2023 excess contributions.
5. Enter the Total Value of the IRA.
   • This will generate Form 5329 with the appropriate tax for the excess contribution.

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How do I fill out the Paid Preparer information on page 2 of Form 5329?

The Paid Preparer information is not necessary when filing Form 5329 with your 1040. 

If you plan on filing the Form 5329 on it's own, this can be indicated on Screen 41.1 "Retirement Plan Taxes (5329)".  Scroll down to the section Titled "Other".  Here you will see "1=not filing with Form 1040" (input sheet code 21 and 71).  Enter a 1 in the Taxpayer and/or Spouse column.

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Form 5329 Additional Taxes on Qualified Plans (Including IRAs), and Other Tax-Favored Accounts is not printing or generating

In the event that a return has multiple pension distributions in Screen 13, a selection to suppress 5329 (code 37) in any one distribution will suppress it for all.

In Screen 13.1, Pensions, Code 37 must be unchecked on all distributions in order to have Form 5329 print.

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The taxpayer's address is not printing on the top of Form 5329 Additional Taxes on Qualified Plans (Including IRAs), and Other Tax-Favored Accounts

The address is only required when Form 5329 is not being filed with Form 1040.  When filing separately, go to screen 41.1, Retirement Plan Taxes and enter 1 in the field 1=not filing with Form 1040 (codes 21, 71) to print the address on Form 5329.

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Related topics

• Informational Diagnostic Ref. #526 Form 5329 May be Required