IRS Form 5329

AuthorSeymour Goldberg
ProfessionSenior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
Pages5-5
5
IRS FORM 5329
According to the IRS, the taxpayer must f ile a Form 5329 to advise the
IRS as to IR A penalty items.
For m 5329 is fil ed as an at tac hmen t to t he For m 104 0 for the r esp ec-
tive income tax ret urn for the year involved.
If Form 5329 is not filed and an IR A penalty item is found with
respect to the tax payer at a later date, then a delinquent Form 5329
should be filed with the IRS. The Form 5329 that is used is the Form
5329 that is applicable for the delinquent year.
According to the IRS, in the event that the ta xpayer receives an
early distribution that is subject to the tax on early distributions from a
qualified retirement plan including from a traditional IR A (other than
a Roth IRA) and the distribution code is correct ly shown in box 7 on
Forms 1099-R, then the taxpayer does not have to file Form 5329.
If a taxpayer owes an additional tax on an excess accumulation in a
qualified ret irement plan (including an I RA), then the taxpayer is gen-
erally required to pay a 50 percent excise tax penalty to the IRS on any
shortfall amount of a requi red minimum distribution. However, the IRS
can waive part or al l of the 50 percent penalty on the shortfa ll amount if
the taxpayer can show that the shortfa ll was due to reasonable error and
the taxpayer is t aking reasonable steps to remedy the shortfall.
In order to obtain a waiver from t he IRS, the ta xpayer must follow
the instr uctions to IRS Form 5329 and attach a statement of explanation
to the Form 5329. The IRS then reviews the information and deter-
mines whether to grant the taxpayer’s waiver request.
Author’s Note
If a Form 5329 is not timely filed or not filed at all and the taxpayer
has IRA penalty liabilities, then a delinquency penalt y will generally be
assessed by the IRS on the IRA penalty amounts. In addition, interest
will be charged as well. A delinquency penalty is a difficult penalty to
abate.
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