Form 5329 is used to report any additional income tax or excise tax that you may owe in connection with individual retirement arrangements (IRAs), other qualified retirement plans, annuities, modified endowment contracts, or MSAs.
This form is available in two copies: Copy 1 is for you, and Copy 2 is for your spouse.
Part I of the form is used to calculate a special penalty tax on early distributions from qualified retirement plans, annuity contracts, or modified endowment contracts. Generally speaking, an early distribution is one that you receive before you reach age 59-1/2, but there are lots of exceptions—see the IRS instructions for more information.
If your 1099-R shows code 1, 2, 3, or 5 (and isn't from a Roth IRA), we automatically calculate the taxable amount of the early distribution and enter it on line a. of the mini-worksheet for line 1. (We include taxable amounts for codes 3 and 5 only if you were under age 59-1/2 on January 1, 2011). In computing the taxable amount, we exclude any amounts you may have rolled over to another retirement arrangement or plan, as well as the part of your IRA distributions that represents a return of nondeductible IRA contributions figured on Form 8606.
If you converted all or part of your traditional IRA to a Roth IRA, we treat the taxable amount of the conversion distribution as zero.
There's a separate mini-worksheet for early distributions from Roth IRAs.
For non-Roth IRAs, we treat an early distribution as being excluded from the early distribution tax if the Form 1099-R that you received for the distribution shows Code 2, or shows Code 3 and you were under age 59-1/2 on January 1, 2011.