Form 5329 Instructions: Exceptions, Excess Contributions, and RMDs

Form 5329 is the IRS form you use to report additional taxes on retirement and other tax-favored accounts: the 10% penalty on early withdrawals, the 6% excise on excess contributions, and the 25% penalty on missed required minimum distributions. You complete only the parts that match what happened, apply any exception code that reduces or eliminates the penalty, and either attach the form to your Form 1040 or mail it as a standalone filing. These instructions walk through when the form is required, which part to use, and how to claim exceptions or request a waiver.

When You Can Skip Form 5329

Not every early withdrawal requires this form. If your 1099-R shows distribution code 1 in box 7, meaning the plan flagged the payout as an early distribution with no known exception, and you owe the full 10% additional tax on the entire amount, you can report that tax directly on Schedule 2 of your Form 1040 without touching Form 5329.¹

You do need Form 5329 in three situations:

You qualify for an exception to the 10% early-distribution penalty that your plan custodian did not reflect on the 1099-R.
You made excess contributions to an IRA, Roth IRA, Coverdell ESA, Archer MSA, HSA, or ABLE account.
You missed a required minimum distribution.

Skipping the form when it’s required is risky. The IRS can assess the full penalty on its own and will not apply an exception you never claimed.

Which Part of the Form You Complete

Form 5329 has nine parts, and you fill in only the ones that apply. Enter your name, Social Security number, and address at the top, then go straight to the relevant part.²

Part I: 10% additional tax on early distributions from IRAs, qualified retirement plans, and modified endowment contracts.
Part II: additional tax on certain distributions from Coverdell ESAs, qualified tuition programs, and ABLE accounts.
Parts III through VIII: 6% excise tax on excess contributions to traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, HSAs, and ABLE accounts, respectively.
Part IX: 25% excise tax on missed required minimum distributions from qualified retirement plans and IRAs.

Most filers only need Part I or Part IX.

Part I: Reporting an Early Distribution

Part I applies when you take money from an IRA, employer plan, or modified endowment contract before age 59½.¹ The default rate is 10% of the taxable amount. One exception: if you take a distribution from a SIMPLE IRA within the first two years of participating in the plan, the rate is 25%.³

Enter the total taxable early distribution on Line 1. On Line 2, enter the portion covered by an exception along with the exception code. The remainder on Line 3 gets multiplied by 10% (or 25%) to produce the additional tax on Line 4.

Exception Codes You’ll See Most Often

The exception code tells the IRS why part or all of the distribution should escape the 10% penalty.⁴ The most common ones:

01: separated from your employer during or after the year you turned 55 (50 for public safety employees in a governmental plan). This applies to employer plans only, not IRAs.
02: substantially equal periodic payments taken under an IRS-approved schedule.
03: total and permanent disability.
04: distribution after the account owner’s death.
05: unreimbursed medical expenses exceeding 7.5% of AGI.
08: qualified higher education expenses (IRAs only).
09: first-time home purchase, up to $10,000 lifetime (IRAs only).

Qualified birth or adoption distributions have their own line on the form (Line 19 in the 2025 version) rather than a numbered exception code. You can exclude up to $5,000 per child within one year of the birth or adoption, and you must attach a statement showing the child’s name, age, and taxpayer identification number.¹

If more than one exception applies to a single distribution, use code 99 and attach a breakdown showing how much falls under each exception.

SECURE 2.0 Exceptions

Several new penalty exceptions took effect in 2024 and 2025:

Terminal illness: if a physician certifies a condition expected to result in death within 84 months, distributions from any qualified plan or IRA are exempt with no dollar cap.⁴
Emergency personal expenses: one distribution per calendar year of up to $1,000. You cannot take another emergency distribution for three years unless you repay the first or make contributions equal to the amount withdrawn.⁵
Domestic abuse: up to the lesser of $10,000 (indexed for inflation) or 50% of your vested account balance if you were a victim within the prior 12 months. Self-certification is permitted.
Federally declared disasters: up to $22,000 if you suffered an economic loss from a qualified disaster.

Each new exception has its own reporting line or code. Check the current year’s instructions, because the IRS has been updating the form as these provisions phase in.

Excess Contributions: Parts III Through VIII

When you put more into a tax-favored account than the law allows, the IRS imposes a 6% excise tax on the excess for every year it remains in the account.⁶ Each account type has its own part: traditional IRAs (III), Roth IRAs (IV), Coverdell ESAs (V), Archer MSAs (VI), HSAs (VII), and ABLE accounts (VIII).

For 2026, the IRA contribution limit is $7,500, with an additional $1,100 catch-up if you are 50 or older.⁷ An excess contribution occurs when you go over that limit or contribute more than your taxable compensation for the year.

The math is the same across account types. Add the current year’s excess to any uncorrected excess carried forward from prior years, and multiply by 6%. The tax cannot exceed 6% of the account’s total value on December 31 of the tax year.⁸

Stopping the 6% Before It Repeats

The 6% hits again every year the excess sits in the account. Fixing it fast matters.

If you withdraw the excess plus any net income attributable to it before your tax return due date (including extensions), you avoid the 6% for that year entirely.⁹ The withdrawn earnings are taxable income in the contribution year; the excess itself is not taxed again.

Miss that deadline, and you owe the 6% for the contribution year. You can absorb the excess going forward by reducing the next year’s contribution by the overage. Over-contribute $1,000 to a traditional IRA in 2025 and fail to withdraw it in time, and you owe $60 for 2025, then limit your 2026 contribution to $6,500 instead of $7,500. Once absorbed, the annual penalty stops.

Part IX: Missed Required Minimum Distributions

If you are 73 or older and fail to withdraw your full RMD from a qualified retirement plan or IRA, the penalty is 25% of the shortfall.¹⁰ That rate dropped from 50% under SECURE 2.0, effective for tax years beginning after 2022.

RMDs generally must begin by April 1 of the year after you turn 73.¹¹ For employer plans, not IRAs, you can delay until April 1 after the year you actually retire if the plan allows.

Calculate each account’s RMD separately, compare the required total to what you withdrew, and enter the shortfall on Part IX. Multiply by 25%. A $6,000 shortfall produces a $1,500 penalty.

Cutting the Rate to 10%

SECURE 2.0 added a correction window that reduces the penalty from 25% to 10%. To qualify, take the missed distribution and file a return reflecting the corrected tax before 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 you missed the RMD. In practice, you have roughly two years to fix the mistake and file Form 5329 at the 10% rate.

Requesting a Full Waiver

The IRS can waive the penalty entirely if the shortfall was caused by reasonable error and you have taken steps to fix it. The usual reasonable-cause situations are a custodian processing error, serious illness, or bad advice from a financial institution.

To request the waiver, complete Part IX lines 52 through 53 as you normally would. On the dotted line next to line 54, write “RC” followed by the shortfall amount you want waived, in parentheses. Subtract that amount from your total shortfall so the line reflects only the portion you are not asking to have waived. Attach a signed statement explaining the reasonable cause and confirming that you have already taken the missed distribution.¹ Pay any tax due on the non-waived portion. The IRS will review your explanation and notify you if the waiver is denied.

How to File the Form

Attach Form 5329 to your Form 1040 when you file a regular return. The additional tax flows to Schedule 2, Line 8, and gets included in your total tax liability.

File it alone by mail if you do not otherwise need to file a return, or if you are correcting a prior year. Form 5329 cannot be e-filed as a standalone return. Include your address on page 1, sign and date page 3, and use the same deadline and IRS mailing address as your Form 1040.

For prior-year corrections, use the version of the form for that specific tax year, not the current one. Write the tax year at the top, complete the relevant part, and mail it with any payment due. If you are requesting an RMD waiver, include the reasonable-cause statement and pay only the tax on the non-waived portion.

Why Filing Even a Zero-Tax Form 5329 Can Protect You

Filing Form 5329 starts the statute of limitations clock. If you never file the form, the IRS has a longer window to come back and assess penalties.

Under SECURE 2.0, when Form 5329 is not filed, the IRS generally has three years from the filing date of your Form 1040 (or its due date, if later) to assess an RMD excise tax on an IRA shortfall. For excess contribution penalties, the window stretches to six years if you rely on Form 1040 as the applicable return rather than filing a separate Form 5329. Filing Form 5329 and reporting that no penalty is owed locks in the shorter period.

The practical takeaway: even in years when you believe no penalty applies, consider filing Form 5329 showing zero tax. That starts the three-year clock and closes the door on future audits of that year’s RMD compliance. Without it, the longer period applies and the exposure sits open.

1
Internal Revenue Service. Instructions for Form 5329 – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
2
Internal Revenue Service. IRS Form 5329 – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
3
Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules
4
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
5
Internal Revenue Service. Notice 2024-55 – Certain Exceptions to the 10 Percent Additional Tax Under Code Section 72(t)
6
Office of the Law Revision Counsel. 26 U.S. Code 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
7
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
8
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
9
Internal Revenue Service. IRA Year-End Reminders
10
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)