Section references are to the Internal Revenue Code unless otherwise noted.
Qualified health savings account (HSA) funding distribution. You can elect to make a one-time direct trustee-to-trustee transfer from your IRA (other than a SIMPLE IRA or a SEP IRA) to your HSA. The maximum amount you can transfer is the maximum HSA contribution limit for the year. Generally, the amount transferred is not included in your income and the additional 10% tax on early distributions does not apply. See Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans, for details.
Use Form 5329 to report additional taxes on:
You must file Form 5329 if any of the following apply.
Note. You do not have to file Form 5329 if distribution code 1 is correctly shown in box 7 of all Forms 1099-R and you owe the additional tax on each Form 1099-R. Instead, see the instructions for Form 1040, line 60, or Form 1040NR, line 55, for how to report the additional 10% tax directly on that line.
Tip: If you rolled over part or all of a distribution from a qualified retirement plan, the part rolled over is not subject to the additional tax on early distributions. See the instructions for Form 1040, lines 15a and 15b or lines 16a and 16b; Form 1040A, lines 11a and 11b or 12a and 12b; or Form 1040NR, lines 16a and 16b or 17a and 17b, for how to report the rollover.
File Form 5329 with your 2007 Form 1040 or Form 1040NR by the due date, including extensions, of your Form 1040 or Form 1040NR.
If you do not have to file a 2007 income tax return, complete and file Form 5329 by itself at the time and place you would be required to file Form 1040 or Form 1040NR. Be sure to include your address on page 1 and your signature and the date on page 2. Enclose, but do not attach, a check or money order payable to "United States Treasury" for any taxes due. Write your SSN and "2007 Form 5329" on the check.
Prior tax years. If you are filing Form 5329 for a prior year, you must use that year's version of the form. If you do not have other changes and have not previously filed a federal income tax return for that year, file Form 5329 by itself (discussed earlier). If you have other changes, file Form 5329 for that year with Form 1040X, Amended U.S. Individual Income Tax Return.
Qualified retirement plan. A qualified retirement plan includes:
For purposes of the additional tax on early distributions, an eligible governmental section 457 deferred compensation plan is treated as a qualified retirement plan, but only to the extent that a distribution is attributable to an amount transferred from a qualified retirement plan (defined above).
Note. Modified endowment contracts are not qualified retirement plans.
Traditional IRAs. For purposes of Form 5329, a traditional IRA is any IRA, including a simplified employee pension (SEP) IRA, other than a SIMPLE IRA or Roth IRA.
Early distribution. Generally, any distribution from your IRA, other qualified retirement plan, or modified endowment contract before you reach age 59 1/2 is an early distribution.
Rollover. A rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan. Generally, you must complete the rollover within 60 days of receiving the distribution. Any taxable amount not rolled over must be included in income and may be subject to the additional tax on early distributions.
The IRS may waive the 60-day requirement if failing to waive it would be against equity or good conscience, such as situations where a casualty, disaster, or other events beyond your reasonable control prevented you from meeting the 60-day requirement. Also, the 60-day period may be extended if you had a frozen deposit. See Pub. 590, Individual Retirement Arrangements (IRAs), for details.
Compensation. Compensation includes wages, salaries, tips, bonuses, and other pay you receive for services you perform. It also includes sales commissions, commissions on insurance premiums, and pay based on a percentage of profits. It includes net earnings from self-employment, but only for a trade or business in which your personal services are a material income-producing factor.
For IRAs, treat nontaxable combat pay and all taxable alimony received under a decree of divorce or separate maintenance as compensation.
Compensation does not include any amounts received as a pension or annuity and does not include any amount received as deferred compensation.
Taxable compensation is your compensation that is included in gross income reduced by any deductions on Form 1040, lines 27 and 28, or on Form 1040NR, line 27, but not by any loss from self-employment.
See Pub. 590; Pub. 560, Retirement Plans for Small Business; Pub. 575, Pension and Annuity Income; Pub. 970, Tax Benefits for Education; and Pub. 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma.
Joint returns. If both you and your spouse are required to file Form 5329, complete a separate form for each of you. Include the combined tax on Form 1040, line 60.
Amended returns. If you are filing an amended 2007 Form 5329, check the box at the top of page 1 of the form. Do not use the 2007 Form 5329 to amend your return for any other year. Instead, see Prior tax years on page 1.
In general, if you receive an early distribution (including an involuntary cashout) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income generally is subject to an additional 10% tax. But see Exception for Roth IRA Distributions on this page.
The additional tax on early distributions does not apply to any of the following:
Note. Any related earnings withdrawn with excess contributions are subject to the additional tax on early distributions if you were under age 59 1/2 at the time of the distribution.
See the instructions for line 2 on page 3 for other distributions that are not subject to the tax.
Enter the amount of early distributions included in income that you received from:
Certain prohibited transactions, such as borrowing from your IRA or pledging your IRA assets as security for a loan, are considered to be distributions and may also cause you to owe the additional tax on early distributions. See Pub. 590 for details.
If you received an early distribution from a Roth IRA, first allocate the amount on your 2007 Form 8606, line 19, in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount).
Then, include on line 1 of Form 5329 the amount from your 2007 Form 8606, line 25, plus the amount, if any, allocated to the amount on your 2007 Form 8606, line 20, and the amount, if any, allocated to line 18 of your 2003 through 2007 Forms 8606. Also include the amount, if any, from your 2007 Form 8606, line 20, on Form 5329, line 2, and enter exception number 09.
Example. You converted $20,000 from a traditional IRA to a Roth IRA in 2003 and converted $10,000 in 2004. Your 2003 Form 8606 had $5,000 on line 17 and $15,000 on line 18 and your 2004 Form 8606 had $3,000 on line 17 and $7,000 on line 18. You made Roth IRA contributions of $2,000 for 2003 and 2004. You did not make any Roth IRA conversions or contributions for 2005 through 2007, or take any Roth IRA distributions before 2007. On July 9, 2007, at age 53, you took a $33,000 distribution from your Roth IRA. Your 2007 Form 8606 shows $33,000 on line 19; $29,000 on line 23 ($33,000 minus $4,000 for your contributions on line 22) and $0 on line 25 ($29,000 minus your basis in Roth IRA conversions of $30,000). First, $4,000 of the $33,000 is allocated to your 2007 Form 8606, line 22; then $15,000 to your 2003 Form 8606, line 18; $5,000 to your 2003 Form 8606, line 17; and $7,000 to your 2004 Form 8606, line 18. The remaining $2,000 is allocated to the $3,000 on your 2004 Form 8606, line 17. On line 1, enter $22,000 ($15,000 allocated to your 2003 Form 8606, line 18, plus the $7,000 that was allocated to your 2004 Form 8606, line 18). If you take a Roth IRA distribution in 2008, the first $1,000 will be allocated to the $1,000 remaining from your 2004 Form 8606, line 17, and will not be subject to the additional tax on early distributions.
Additional information. For more details, see Are Distributions Taxable? in Pub. 590.
The additional tax on early distributions does not apply to the distributions described below. Enter on line 2 the amount that can be excluded. In the space provided, enter the applicable exception number (01-12).
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No. Exception
01 Qualified retirement plan distributions
(does not apply to IRAs) if you
separated from service in or after the
year you reach age 55 (age 50 for
qualified public safety employees).
02 Distributions made as part of a series of
substantially equal periodic payments
(made at least annually) for your life (or
life expectancy) or the joint lives (or joint
life expectancies) of you and your
designated beneficiary (if from an
employer plan, payments must begin
after separation from service).
03 Distributions due to total and permanent
disability.
04 Distributions due to death (does not
apply to modified endowment contracts).
05 Qualified retirement plan distributions up
to (1) the amount you paid for
unreimbursed medical expenses during
the year minus (2) 7.5% of your
adjusted gross income for the year.
06 Qualified retirement plan distributions
made to an alternate payee under a
qualified domestic relations order (does
not apply to IRAs).
07 IRA distributions made to unemployed
individuals for health insurance
premiums.
08 IRA distributions made for higher
education expenses.
09 IRA distributions made for purchase of a
first home, up to $10,000.
10 Distributions due to an IRS levy on the
qualified retirement plan.
11 Qualified distributions to reservists while
serving on active duty for at least 180
days.
12 Other (see Other, below). Also, enter
this code if more than one exception
applies.
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Other. The following exceptions also apply.
For additional exceptions that apply to annuities, see Pub. 575.
If any amount on line 3 was a distribution from a SIMPLE IRA received within 2 years from the date you first participated in the SIMPLE IRA plan, you must multiply that amount by 25% instead of 10%. These distributions are included in boxes 1 and 2a of Form 1099-R and are designated with code S in box 7.
This tax does not apply to distributions that are includible in income if:
Enter on line 6 the portion of line 5 that is excluded.
If you contributed more for 2007 than is allowable or you had an amount on line 17 of your 2006 Form 5329, you may owe this tax. But you may be able to avoid the tax on any 2007 excess contributions (see the instructions for line 15).
Enter the amount from line 16 of your 2006 Form 5329 only if the amount on line 17 of your 2006 Form 5329 is more than zero.
If you contributed less to your traditional IRAs for 2007 than your contribution limit for traditional IRAs, enter the difference.
If you are not married filing jointly, your contribution limit for traditional IRAs is the smaller of your taxable compensation (see page 2) or $4,000 ($5,000 if age 50 or older at the end of 2007). If you are married filing jointly, your contribution limit is generally $4,000 ($5,000 if age 50 or older at the end of 2007) and your spouse's contribution limit is $4,000 ($5,000 if age 50 or older at the end of 2007). But if the combined taxable compensation for you and your spouse is less than $8,000 ($9,000 if one spouse is 50 or older at the end of 2007; $10,000 if both spouses are 50 or older at the end of 2007), see How Much Can Be Contributed? in Pub. 590 for special rules.
Tip: If you participated in a 401(k) plan and the employer who maintained the plan filed for bankruptcy in an earlier year, you may be able to contribute up to $7,000 to your traditional IRA. See Pub. 590 for more details.
Also include on line 11a or 11b of the IRA Deduction Worksheet in the instructions for Form 1040, line 32, the smaller of (a) Form 5329, line 10, or (b) the excess, if any, of Form 5329, line 9, over the sum of Form 5329, lines 11 and 12.
Enter on line 11 any withdrawals from your traditional IRAs that are included in your income. Do not include any withdrawn contributions reported on line 12.
Enter any excess contributions to your traditional IRAs for 1976 through 2005 that you had returned to you in 2007 and any 2006 excess contributions that you had returned to you in 2007 after the due date (including extensions) of your 2006 income tax return, that are included on line 9, if:
Enter the excess of your contributions to traditional IRAs for 2007 (unless withdraw – see below) over your contribution limit for traditional IRAs. See the instructions for line 10 to figure your contribution limit for traditional IRAs. Any amount you contribute for the year in which you reach age 70 1/2 or a later year is an excess contribution because your contribution limit is zero. Do not include rollovers in figuring your excess contributions.
You can withdraw some or all of your excess contributions for 2007 and they will not be treated as having been contributed if:
If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an amended return with "Filed pursuant to section 301.9100-2" written at the top. Report any related earnings for 2007 on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed).
If you contributed more to your Roth IRA for 2007 than is allowable or you had an amount on line 25 of your 2006 Form 5329, you may owe this tax. But you may be able to avoid the tax on any 2007 excess contributions (see the instructions for line 23).
Enter the amount from line 24 of your 2006 Form 5329 only if the amount on line 25 of your 2006 Form 5329 is more than zero.
If you contributed less to your Roth IRAs for 2007 than your contribution limit for Roth IRAs, enter the difference. Your contribution limit for Roth IRAs is generally your contribution limit for traditional IRAs (see the instructions for line 10) reduced by the amount you contributed to traditional IRAs. But your contribution limit for Roth IRAs may be further reduced or eliminated if your modified AGI for Roth IRA purposes is over:
See Pub. 590 for details.
Generally, enter the amount from Form 8606, line 19, plus any qualified distributions. But if you withdrew the entire balance of all your Roth IRAs, do not enter less than the amount on Form 5329, line 18 (see Example).
Example. You contributed $1,000 to a Roth IRA in 2005, your only contribution to Roth IRAs. In 2007, you discovered you were not eligible to contribute to a Roth IRA in 2005. On September 9, 2007, you withdrew $800, the entire balance in the Roth IRA. You must file Form 5329 for 2005 and 2006 to pay the additional taxes for those years. When you complete Form 5329 for 2007, you enter $1,000 (not $800) on line 20, because you withdrew the entire balance.
Enter the excess of your contributions to Roth IRAs for 2007 (unless withdrawn – see below) over your contribution limit for Roth IRAs (see the instructions for line 19).
Any amounts converted to a Roth IRA are excess Roth IRA contributions if your modified AGI for Roth IRA purposes is over $100,000 or your filing status is married filing separately and you lived with your spouse at any time in 2007. See Recharacterizations in the Instructions for Form 8606 for details. Do not include rollovers in figuring your excess contributions.
You can withdraw some or all of your excess contributions for 2007 and they will not be treated as having been contributed if:
If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an amended return with "Filed pursuant to section 301.9100-2" written at the top. Report any related earnings for 2007 on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed).
If the contributions to your Coverdell ESAs for 2007 were more than is allowable or you had an amount on line 33 of your 2006 Form 5329, you may owe this tax. But you may be able to avoid the tax on any 2007 excess contributions (see the instructions for line 31).
Enter the amount from line 32 of your 2006 Form 5329 only if the amount on line 33 of your 2006 Form 5329 is more than zero.
Enter the excess, if any, of the maximum amount that can be contributed to your Coverdell ESAs for 2007 (see the instructions for line 31) over the amount actually contributed for 2007.
Enter your total distributions from Coverdell ESAs in 2007. Do not include rollovers or returned excess contributions.
Enter the excess of the contributions to your Coverdell ESAs for 2007 (not including rollovers) over your contribution limit for Coverdell ESAs. Your contribution limit is the smaller of $2,000 or the sum of the maximum amounts allowed to be contributed by the contributor(s) to your Coverdell ESAs. The maximum contribution may be limited based on the contributor's modified AGI. See Pub. 970 for details.
You can withdraw some or all of the excess contributions for 2007 and they will not be treated as having been contributed if:
If you filed your return without withdrawing the excess contributions, you can still make the withdrawal, but it must be made before June 1, 2008. If you do, file an amended return. Report any related earnings for 2007 on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed).
If you or your employer contributed more to your Archer MSA for 2007 than is allowable or you had an amount on line 41 of your 2006 Form 5329, you may owe this tax. But you may be able to avoid the tax on any 2007 excess contributions (see the instructions for line 39).
Enter the amount from line 40 of your 2006 Form 5329 only if the amount on line 41 of your 2006 Form 5329 is more than zero.
If your contribution limit for your Archer MSAs (the smaller of line 5 or line 6 of Form 8853) is greater than the contributions to your Archer MSAs for 2007, enter the difference on line 35. Also include on your 2007 Form 8853, line 7, the smaller of:
Enter the excess of your contributions to your Archer MSA for 2007 (from Form 8853, line 4) over your contribution limit (the smaller of line 5 or line 6 of Form 8853). Also include on line 39 any excess contributions your employer made. See the Instructions for Form 8853 for details.
However, you can withdraw some or all of the excess contributions for 2007 and they will not be treated as having been contributed if:
Include the withdrawn contributions and related earnings on Form 8853, lines 8a and 8b.
If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an amended return with "Filed pursuant to section 301.9100-2" written at the top. Report any related earnings for 2007 on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed).
If you, someone on your behalf, or your employer contributed more to your HSAs for 2007 than is allowable or you had an amount on line 49 of your 2006 Form 5329, you may owe this tax. But you may be able to avoid the tax on any 2007 excess contributions (see the instructions for line 47).
If your contribution limit for your HSAs (Form 8889, line 12) is greater than the contributions you made to your HSAs (or those made on your behalf) for 2007 (Form 8889, line 2), enter the difference on line 43. Also include on your 2007 Form 8889, line 13, the smaller of:
Enter the excess of your contributions (including those made on your behalf) to your HSAs for 2007 (Form 8889, line 2) over your contribution limit (Form 8889, line 12). Also include on line 47 any excess contributions your employer made. See the instructions for Form 8889 for details.
However, you can withdraw some or all of the excess contributions for 2007 and they will not be treated as having been contributed if:
Include the withdrawn contributions and related earnings on Form 8889, lines 14a and 14b.
If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an amended return with "Filed pursuant to section 301.9100-2" written at the top. Report any related earnings for 2007 on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed).
You owe this tax if you do not receive the minimum required distribution from your qualified retirement plan, including an IRA or an eligible section 457 deferred compensation plan. The additional tax is 50% of the excess accumulation--the difference between the amount that was required to be distributed and the amount that was actually distributed.
IRA (other than a Roth IRA). You must start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70 1/2. At that time, you can receive your entire interest in the IRA or begin receiving periodic distributions. If you choose to receive periodic distributions, you must receive a minimum required distribution each year. You can figure the minimum required distribution by dividing the account balance of your IRAs (other than Roth IRAs) on December 31 of the year preceding the distribution by the applicable life expectancy. For applicable life expectancies, see Pub. 590.
If the trustee, custodian, or issuer of your IRA informs you of the minimum required distribution, you can use that amount.
If you have more than one IRA, you can take the minimum required distribution from any one or more of the individual IRAs.
For more details on the minimum distribution rules (including examples), see Pub. 590.
Tip: A qualified charitable distribution will count towards your minimum required distribution. See Pub. 590 for more information.
Roth IRA. There are no minimum required distributions during the lifetime of the owner of a Roth IRA. Following the death of the Roth IRA owner, required distribution rules apply to the beneficiary. See Pub. 590 for details.
Qualified retirement plans (other than IRAs) and eligible section 457 deferred compensation plans. In general, you must begin receiving distributions from your plan no later than April 1 following the later of (a) the year in which you reach age 70 1/2 or (b) the year in which you retire.
Exception. If you owned more than 5% of the employer maintaining the plan, you must begin receiving distributions no later than April 1 of the year following the year in which you reach age 70 1/2, regardless of when you retire.
Your plan administrator should figure the amount that must be distributed each year.
Waiver of tax. The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking appropriate steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows.
The IRS will review the information you provide and decide whether to grant your request for a waiver.
For more details, see Pub. 590.
Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. We need this information to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are required to give us this information if you made certain contributions or received certain distributions from qualified plans, including IRAs, and other tax-favored accounts. Our legal right to ask for the information requested on this form is sections 6001, 6011, 6012(a), and 6109 and their regulations. The reason we need your social security number is to secure proper identification in order to gain access to the tax information in our files to properly process the form.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. However, we may give this information to the Department of Justice for civil and criminal litigation, and to cities, states, and the District of Columbia to carry out their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
The average time and expenses required to complete and file this form will vary depending on individual circumstances. For the estimated averages, see the instructions for your income tax return.
If you have suggestions for making this form simpler, we would be happy to hear from you. See the instructions for your income tax return.