Get 1998 Instructions 5329. Additional Taxes Attributable To IRAs, Other Qualified Retirement Plans

If you're taking out funds from your retirement account prior to 59½ (and the coronavirus exception or other exceptions don't apply), use IRS Form 5329 to report the amount of 10% additional tax you owe on an early distribution or to claim an exception to the 10% additional tax.

Early Distributions Generally, any distribution from your qualified retirement plan, annuity, or modified endowment contract that you receive before you reach age 59½ is an early distribution. The portion of the early distribution that is included in income is subject to an additional 2½% tax.

The additional tax is equal to 10% of the portion of the distribution that's includible in gross income. Generally, early distributions are those you receive from a qualified retirement plan or deferred annuity contract before reaching age 59½.

You may be able to get the penalty waived if you missed taking your RMD due to an illness, mental incapacity, or bank error. You'll calculate that penalty in Part 9 of Form 5329. To request a waiver, enter “RC” (for reasonable cause) and the amount of shortfall you want waived on the dotted line next to Line 54.

Generally, early withdrawal from an Individual Retirement Account (IRA) prior to age 59½ is subject to being included in gross income plus a 10 percent additional tax penalty.

Form 5329 must be filed by taxpayers with retirement plans or education savings accounts who owe an early distribution or another penalty. The form must be submitted with a taxpayer's annual tax return—Form 1040 or Form 1040-SR. Taxpayers who do not file the form could end up owing more in penalties and taxes.

Also, California does not have taxes similar to the tax on excess contributions to traditional IRAs, Roth IRAs, Coverdell ESAs, ABLE accounts, Archer MSAs, or tax on excess accumulation in qualified retirement plans.

Early Distributions Generally, any distribution from your qualified retirement plan, annuity, or modified endowment contract that you receive before you reach age 59½ is an early distribution. The portion of the early distribution that is included in income is subject to an additional 2½% tax.