Instructions for Form 5329 |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Qualified reservist distributions.
The additional 10% tax on early distributions does not apply to distributions from IRAs or elective deferral accounts
(401(k) and 403(b) plans, or
similar arrangements) after September 11, 2001, if you were a reservist called to active duty for a period of more than 179
days or for an indefinite
period. Generally, the distribution must be made during the period you were on active duty. For more information on these
distributions, see Pub. 590,
Individual Retirement Arrangements (IRAs). If you must file Form 5329, enter exception number 11 on line 2.
Public safety employees.
The additional 10% tax on early distributions does not apply to distributions (from governmental defined benefit plans)
after August 17, 2006, if
you were a public safety employee (police officer, firefighter, or medical service employee) and you separated from service
in or after the year you
reach age 50. If you must file Form 5329, enter exception number 01 on line 2. See the instructions for Line 2 on page 3 for more
information.
Qualified charitable distributions.
Qualified charitable distributions are taken into account for purposes of the minimum required distribution from your
IRA. See Required
Distributions on page 6 for more information.
Use Form 5329 to report additional taxes on:
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Individual retirement arrangements (IRAs),
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Other qualified retirement plans,
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Modified endowment contracts,
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Coverdell ESAs,
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Qualified tuition programs (QTPs),
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Archer MSAs, or
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Health savings accounts (HSAs).
You must file Form 5329 if any of the following apply, except you do not have to file Form 5329 to report a qualified hurricane
distribution.
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.
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You received an early distribution from a Roth IRA, the amount on Form 8606, line 23, is more than zero, and you are required
to enter an
amount that is more than zero on Form 5329, line 1 (see Exception for Roth IRA Distributions that begins on page 2).
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You received an early distribution from a qualified retirement plan (other than a Roth IRA) and distribution code 1 is not
shown in box 7 of
Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
-
You meet an exception to the tax on early distributions and distribution code 1 is shown in box 7 of Form 1099-R.
-
You meet an exception to the tax on early distributions from the list on page 3 but box 7 of your Form 1099-R does not indicate
an exception
or the exception does not apply to the entire distribution.
-
You received taxable distributions from Coverdell ESAs or QTPs.
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The contributions for 2006 to your traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, or HSAs exceed your maximum contribution
limit,
or you had a tax due from an excess contribution on line 17, 25, 33, 41, or 49 of your 2005 Form 5329.
-
You did not receive the minimum required distribution from your qualified retirement plan.
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 2006 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 2006 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 “2006 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, file Form 5329 by
itself (see above). 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:
-
A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan),
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A tax-sheltered annuity contract,
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A qualified annuity plan, and
-
An IRA.
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 59½
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.
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