Form 5329 Completed Example: Penalties, Waivers, and RMDs

To fill out Form 5329, complete only the part that matches what happened — an early retirement withdrawal, an excess IRA contribution, or a missed required minimum distribution — calculate the additional tax at the rate for that part, and carry the total to Schedule 2, Line 8 of your Form 1040.1Internal Revenue Service. Schedule 2 (Form 1040) – Additional Taxes The form has nine parts, but most people touch one. The rest stay blank.

First, Check Whether You Even Need the Form

If your only issue is a straightforward early distribution and your Form 1099-R already shows code 1 in box 7, you can skip Form 5329 entirely. Report the 10% additional tax directly on Schedule 2, Line 8 of your Form 1040 and move on.2Internal Revenue Service. Instructions for Form 5329 (2025) – Section: Part I Additional Tax on Early Distributions

You need the actual form when you’re claiming an exception that reduces or eliminates the early-withdrawal penalty, when you have an excess contribution to report, or when you missed a required minimum distribution. Those three situations account for the vast majority of Form 5329 filings.3Internal Revenue Service. Instructions for Form 5329

Match Your Situation to a Part

Landing in the right section is half the work. Use Part I for early distributions from retirement plans and IRAs. Use Part III for excess Traditional IRA contributions and Part IV for excess Roth IRA contributions (both if you overcontributed to each). Use Part IX for a missed RMD, whether on your own account or an inherited one. The other parts cover education accounts, Archer MSAs, HSAs, and ABLE accounts, and most filers leave them blank.3Internal Revenue Service. Instructions for Form 5329

Filling Out Part I: Early Distribution Penalty

Part I applies when you took money from a retirement plan or IRA before age 59½. The standard penalty is 10% of the taxable portion of the distribution.4Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts

On Line 1, enter the taxable amount of the distribution. That figure comes from box 2a of your Form 1099-R. On Line 2, enter any amount that qualifies for an exception, and write the exception’s numbered code next to it. Common codes:

The SECURE 2.0 Act added newer exceptions, including distributions to domestic abuse survivors (the lesser of $10,000, indexed for inflation, or 50% of the account balance) and emergency personal expense distributions. These carry their own codes on the current form.8Internal Revenue Service. Notice 2024-55 – Certain Exceptions to the 10 Percent Additional Tax

Line 3 is Line 1 minus Line 2 — the amount actually subject to the penalty. Multiply Line 3 by 10% and enter the result on Line 4. Then transfer that figure to Schedule 2, Line 8 of your Form 1040.1Internal Revenue Service. Schedule 2 (Form 1040) – Additional Taxes

One rate exception: if you withdrew from a SIMPLE IRA within your first two years in the plan, the penalty is 25% instead of 10%. Your 1099-R will show code S in box 7. When you have SIMPLE IRA distributions at 25% and other early distributions at 10%, follow the Line 4 instructions for the split calculation.9Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules

Filling Out Parts III and IV: Excess IRA Contributions

An excess contribution to a Traditional or Roth IRA gets hit with a 6% penalty tax every year until you fix it.10Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities Part III is for Traditional IRAs, Part IV is for Roth IRAs. Use both if you overcontributed to each.

For 2026, the IRA contribution limit is $7,500, or $8,600 if you’re 50 or older (the $7,500 base plus a $1,100 catch-up).11Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026; IRA Limit Increases to $7,500 A contribution can also be excess if it exceeds your taxable compensation for the year, even when it’s under the dollar limit. For Roth IRAs, income phase-outs can create an excess even when the dollar contribution looks fine.

The line logic is the same in both parts. Enter the current year’s excess. Add any excess carried over from the prior year (from last year’s Form 5329). That gives you the total excess subject to the 6% tax. Then compare that total against the year-end fair market value of all your IRAs of that type; the 6% applies to whichever number is smaller.12Internal Revenue Service. Retirement Topics – IRA Contribution Limits – Section: Tax on Excess IRA Contributions The fair market value cap matters when the account has lost value. You won’t owe more than 6% of what the account is actually worth.

Stopping the 6% From Recurring

You have two ways to end the annual penalty. The clean option: withdraw the excess plus any earnings attributable to it before your tax filing deadline (including extensions). The earnings portion is taxable income and could trigger the 10% early distribution penalty if you’re under 59½.

The slower option: contribute less than the limit the following year and apply the prior year’s excess against that year’s cap. You still owe 6% for the year the excess existed, but it doesn’t carry forward. When the excess is finally cleared, file Form 5329 for that year showing zero carried forward. That ends the cycle.

Filling Out Part IX: Missed Required Minimum Distributions

Part IX handles the shortfall between what you were required to withdraw and what you actually withdrew. The penalty is 25% of the shortfall, or 10% if you correct it within the correction window.13Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans

The current Part IX splits the calculation into two tracks. Lines 52a and 53a are for shortfalls already corrected within the window, taxed at 10%. Lines 52b and 53b are for everything else, taxed at 25%. On each track, enter the required amount, subtract what you actually took, and multiply the shortfall by the applicable rate. Line 54a shows the 10% result, Line 54b shows the 25% result, and Line 55 adds them together for transfer to Schedule 2.3Internal Revenue Service. Instructions for Form 5329

The correction window runs from the date the tax is imposed until the earliest of three events: the IRS mails you a notice of deficiency, the IRS assesses the tax, or the last day of the second tax year after the year the penalty applies to.13Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans For a missed 2025 RMD, that generally means you have until December 31, 2027 to take the distribution and file at the 10% rate, assuming the IRS hasn’t contacted you first.

Asking for the Penalty to Be Waived

The IRS can waive the missed-RMD penalty entirely when the shortfall resulted from reasonable error and you’ve taken steps to fix it. This is where most filers get real relief.

To request the waiver:

  • Take the missed distribution as soon as you discover the error.
  • Complete Part IX as normal.
  • On the dotted line next to Line 54a or 54b, write “RC” and the shortfall amount in parentheses.
  • Subtract that amount from the calculated penalty. The line may drop to zero.
  • Attach a letter explaining what went wrong. Common reasons include incorrect advice from a financial institution, confusion about when RMDs were supposed to start, or a custodian’s administrative error.
  • File the form and pay only whatever reduced amount, if any, appears on Line 55.3Internal Revenue Service. Instructions for Form 5329

The IRS grants these waivers regularly when the explanation is straightforward and the distribution has already been taken. A denial produces a notice, and you’ll owe the full penalty plus interest from the original due date.

Attaching, Mailing, and Deadlines

The total from Form 5329 flows to Schedule 2, Line 8 of your Form 1040.1Internal Revenue Service. Schedule 2 (Form 1040) – Additional Taxes Attach the form to your return and file everything together.

If you don’t otherwise need to file a Form 1040, submit Form 5329 as a standalone document. Include your full name, address, and Social Security number, and sign and date the form. Mail it to the IRS service center where you’d normally file Form 1040 — the address varies by state and is listed in the current year’s Form 1040 instructions.3Internal Revenue Service. Instructions for Form 5329

For a prior tax year, use that specific year’s version of the form. If the prior-year filing also involves correcting other items on a return you already filed, attach the prior-year Form 5329 to a Form 1040-X (amended return) for that year.3Internal Revenue Service. Instructions for Form 5329

The filing deadline matches your income tax return: April 15, 2026 for the 2025 tax year.14Internal Revenue Service. IRS Announces First Day of 2026 Filing Season Filing an extension on Form 4868 extends Form 5329’s deadline as well, giving you until October 15. That extra time helps if you’re still arranging to withdraw an excess contribution or calculating a missed RMD.

Why Not Filing Is Riskier Than It Looks

Skipping Form 5329 when you owe a penalty creates a statute-of-limitations problem. Normally the IRS has three years from filing to assess additional taxes. For the 6% excess contribution penalty, reporting only on your Form 1040 without filing Form 5329 extends the assessment period to six years.15Office of the Law Revision Counsel. 26 USC 6501 – Limitations on Assessment and Collection

For tax years 2023 and later, a three-year statute applies to missed IRA RMDs even when Form 5329 isn’t filed, a change from prior law where the window could stay open indefinitely. For missed RMDs from employer plans such as 401(k)s, the older rules may still apply. Filing the form when it’s due starts the clock and closes the issue.