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March 6, 2013

Filing Form 5329: Additional Taxes On Qualified Plans (Including IRAs) and Other Tax-Favored Accounts


Form 5329 is used to address penalties on certain transactions which occur in your retirement account. These include:

  • The 10% early distribution penalty. If your IRA Custodian/Trustee or plan administrator incorrectly indicates whether the distribution amount is subject to the 10% early distribution penalty, you must file Form 5329 for this purpose to correct the reporting.
  • Excess accumulation penalty. You owe the IRS a 50% excess accumulation penalty on any required minimum distribution (RMD) amounts not withdrawn by the deadline. Form 5329 must be filed even if you are asking to have the penalty waived. And
  • The 6% additional tax assessed on excess contributions to IRAs. If you make an excess contribution to an IRA, and you fail to correct the excess contribution by your tax filing deadline, including extensions, you must for Form 5329 to report the penalty.

Form 5329 should be filed with your tax return. However, if your tax return has already been filed, it can be filed separately.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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