Form 5329 - 2014 Tax Year Checklist
Form 5329 for tax year 2014 reports additional taxes tied to qualified plans, qualified retirement plans, and other tax-favored account activity that triggers IRS penalty or excise tax rules. It is most often used for early distributions, excess contributions to tax-advantaged accounts, and failures to take required minimum distributions.
This checklist follows the structure of IRS Form 5329 and supports clean reporting on Form
1040 or Form 1040NR, depending on the filer’s status and filing needs. It also reflects common guidance found on the IRS website and in Publication 590-A, Publication 590-B, Publication
575, and related tax regulations.
Purpose and Scope of Form 5329
Form 5329 calculates additional taxes that apply when the rules for tax-advantaged retirement savings plans are not met. It is not a full tax return by itself, but it adds required computations to tax returns when penalties apply to qualified retirement accounts.
This form does not replace reporting for income items like distributions from pensions or pension and annuity income that belong on Form 1040 lines and worksheets. Instead, it determines whether an excise tax or additional taxes apply to the taxable portion of a distribution or to an uncorrected contribution balance.
When Form 5329 Applies in 2014
Form 5329 applies when early distributions are made from an Individual Retirement Account, a qualified retirement plan, or another qualified plan before age 59½, and an exception does not fully apply. It can also apply to excess contributions made to traditional IRAs, Roth IRAs, Archer
MSAs, or education savings accounts.
The form also covers the additional tax for missed minimum required distributions, including required minimum distribution shortfalls for retirement plan accounts subject to mandatory distributions. Certain situations involving an inherited IRA, beneficiary IRA rules, or minimum distributions under later concepts like the 10-year rule may require careful year-by-year separation to avoid mixing rules.
Ten-Step Checklist (2014)
Step 1: Confirm the Filing Trigger and Account Type
Identify the specific issue that requires IRS Form 5329, such as early distributions, excess contributions, or minimum required distributions that were not taken when needed. Confirm the
account type involved, such as a traditional IRA, a Roth IRA, a qualified retirement plan, a 529 plan, or a Coverdell Education Savings Account.
Step 2: Gather the Required Forms and Support Documents
Collect Forms 1099-R and 1099-Q, plus Form 8606 for basis tracking when Roth IRA or conversion history affects the taxable amount of distributions. Gather Form 8889, Form 8853, and related account statements from the IRA custodian to support IRA contributions, Archer medical savings accounts, or health savings account reporting.
Step 3: Determine the Taxable Amount of Early Distributions
Review each 1099-R to confirm whether an early distribution occurred and whether the distribution is from a retirement plan or an Individual Retirement Arrangement account. Use the taxable amount included in income, not the gross distribution, when completing Part I for additional taxes on early distributions.
Step 4: Apply Exceptions and Codes for Early Distributions
Check the 2014 instructions to determine whether an exception applies and whether it is valid for the specific qualified retirement plan or IRA category involved. Enter the exception amount with the proper code and keep support in the file in case the Internal Revenue Service requests proof during review.
Step 5: Review Education Account Distributions in Part II
For a Coverdell ESA or qualified tuition program distribution, determine whether the distribution exceeded qualified education expenses and created taxable income. Compute the additional tax based on the amount included in income rather than assuming the tax applies only to earnings without running the taxable-portion calculation.
Step 6: Evaluate Excess Contributions to Traditional IRAs
Compare total IRA contributions to the 2014 contribution limit after considering eligibility, compensation limits, and any recharacterizations or rollovers reported in the records. If there is an excess traditional IRA contribution, determine whether it was removed timely, as an excise tax may apply each year the excess remains.
Step 7: Evaluate Excess Contributions to Roth IRAs
Confirm whether the filer was eligible to contribute to a Roth IRA for the tax year, since income limitations can create excess contributions even when the contribution amount seems within limits. If excess contributions were corrected, verify whether earnings were distributed and whether those amounts create an early distribution issue that flows back into Part I.
Step 8: Evaluate Excess Contributions to Archer MSAs, HSAs, and ABLE
Accounts
Use Form 8853 for Archer MSA activity and Form 8889 for Health Savings Account limits to confirm whether excess contributions exist and whether they were corrected under the rules. If an ABLE account issue arises, confirm whether the excess falls under Achieving a Better Life
Experience contribution limits and whether excise tax rules apply for the year.
Step 9: Identify and Compute RMD Shortfalls in Part VIII
Determine whether required minimum distributions applied for 2014, including for an inherited
IRA or employer retirement plan accounts that trigger minimum distributions. Compute the shortfall, calculate the additional tax, and prepare a penalty waiver request when a reasonable error applies, and corrective action has been taken.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Final Review, Filing, and Record Retention
Confirm that each Form 5329 part completed matches the correct account issue and ties to the related IRS forms, including Form 1040, Form 8606, Form 8889, and Form 8853. File the return by the tax filing deadline, retain records for the statute of limitations period, and keep supporting documents ready if the IRS requests verification.
Final Review Notes for Accuracy
Form 5329 should be prepared using the correct tax year version, because contribution limits and penalty rules can change across years and affect tax computations. If software is used, confirm the output against IRS forms and instructions, since tax software platforms or services like TurboTax Expert Full Service can still require manual validation.
When complex facts apply, including multiple retirement accounts or overlapping exceptions, professional advice from tax professionals may reduce risk and support proper application of
Publication 590-B and Publication 575 rules. Maintain a complete file with statements, corrected contribution evidence, and any waiver explanations to support the filing if the Internal Revenue
Service follows up.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
