Instructions for Form 5329 - 2017 Tax Year Checklist
Form 5329 is used to report additional taxes that apply to a tax-favored account when those
amounts are not fully determined through pension and annuity income reporting on federal tax returns for the year. It most often applies to early distributions, excess contributions, and failures to take minimum required distributions under the 2017 federal tax laws.
This checklist is designed for the 2017 tax year and reflects rules in effect before later statutory changes. It helps determine when Form 5329 is required and how it connects to Form 1040,
Form 1099-R, and related IRS forms.
What This Checklist Covers for 2017
This guide applies when activity during the tax year involves qualified retirement plans or individual retirement arrangements that can trigger additional taxes. Common situations include early distributions, excess IRA contributions, and required minimum distribution shortfalls.
Later law changes, including post-2017 penalty reductions and coronavirus-related distributions, do not apply to this checklist. All thresholds, exceptions, and excise tax rates discussed here reflect 2017 tax regulations only.
Determine Whether Form 5329 Is Required
Form 5329 is required when additional taxes must be calculated directly, rather than relying solely on distribution codes. This typically occurs when exceptions must be claimed or when excise taxes apply to excess contributions or missed distributions.
The form is usually attached to Form 1040 for the tax year and matched using the taxpayer’s
Social Security Number. In limited cases where no income tax return is required, Form 5329 may be filed by itself.
Gather Records and Separate Account Types
Form 1099-R should be reviewed and matched to each retirement account because qualified plans, traditional IRAs, and Roth IRAs follow different penalty and exception rules. IRA custodian statements should confirm taxable amounts, contribution activity, and distribution timing.
Education savings accounts, such as Coverdell ESAs and any 529 plan activity, should be separated from retirement accounts. Archer MSA, Health Savings Account, and ABLE account records should be retained to support excess contribution and excise tax determinations.
Step-by-Step Checklist
Step 1: Identify Distributions and Contribution Issues
Confirm whether distributions occurred from qualified retirement accounts, including traditional
IRAs, Roth IRA accounts, or employer retirement plans, and whether any contributions exceeded allowable limits for the tax year. Also, confirm whether any minimum required distributions applied for 2017 and whether the full amount was withdrawn by the applicable deadline.
Step 2: Determine Whether an RMD Was Required
Confirm whether age 70½ was reached during or before the tax year and apply the required beginning date rules rather than relying on simplified birthdate assumptions. If 2017 was the first distribution year, confirm whether the first required minimum distribution was due by April 1 of the following year or December 31.
Step 3: Confirm the Need for Form 5329 Versus Direct Reporting
Determine whether the additional tax can be reported directly on Form 1040 or whether Form
5329 is required to claim an exception or compute excise taxes. Form 5329 is generally required when exception codes are not fully reflected on Form 1099-R or when excess contributions or RMD shortfalls exist.
Step 4: Evaluate Early Distributions
Identify distributions taken before age 59½ and confirm the portion included in income because the IRS penalty applies only to taxable amounts. Review Distribution Code 1 and related coding carefully, as incorrect or incomplete codes often require Form 5329 to claim proper relief.
Step 5: Apply 2017 Exceptions Correctly
Determine whether an exception applies for medical expenses, disability, SEPP arrangements, education expenses, or a first-time homebuyer distribution under applicable limits. For 2017, unreimbursed medical expenses must exceed 7.5 percent of AGI to qualify for the medical exception, not the later 10 percent threshold.
Step 6: Confirm IRA Contribution Limits
Verify combined IRA contributions for traditional IRAs and Roth IRA accounts against the 2017 contribution limit, including catch-up amounts when applicable. Do not combine SEP or SIMPLE
IRA employer contributions with personal IRA contribution limits when evaluating excess contributions.
Step 7: Compute the Excise Tax on Excess Contributions
If excess contributions remained in the account at year-end, compute the excise tax and recognize that it can apply for each year the excess remains uncorrected. Confirm whether timely corrective distributions occurred because proper correction can prevent ongoing IRS penalty exposure.
Step 8: Determine RMD Shortfalls
Calculate the required minimum distribution using applicable life expectancy tables and prior-year account balances, then compare required amounts to actual distributions taken.
Inherited IRA rules should be applied when relevant, as beneficiary IRA calculations differ from owner distribution rules.
Step 9: Apply the Correct 2017 RMD Penalty Rate
For 2017, the excise tax on insufficient distributions is 50 percent of the shortfall amount, regardless of later-law reductions enacted after this tax year. If a reasonable error applies, prepare a penalty waiver request and document corrective withdrawals consistent with IRS
Form 5329 instructions.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Transfer Totals and Retain Records
Sum additional taxes from all applicable sections and transfer the total to Form 1040 line 59 for the 2017 federal return. Retain Form 1099-R, Form 8606, custodian statements, and worksheets to support calculations during the statute of limitations period.
Completing Form 5329 Using the Correct 2017 Structure
Form 5329 part numbering must match the 2017 version to avoid processing errors. Early distribution penalties are reported in Part I, while excess contributions to traditional IRAs and
Roth IRAs are reported in Parts III and IV.
RMD shortfalls are reported in the section addressing excess accumulations rather than the IRA contribution sections. Using incorrect part references from later years is a common filing error.
Filing and Assembly Rules
Form 5329 is generally filed with Form 1040 or Form 1040NR by the applicable tax filing deadline, including extensions. When filed by itself, paper filing is typically required under the
2017 IRS procedures.
Supporting documents should be retained rather than attached unless specifically required. IRS publications, such as Publication 590-A, 590-B, and 575, provide additional technical guidance for reference.
Final Review Before Submission
Confirm that all calculations use 2017 thresholds, penalty rates, and exception rules without incorporating later statutory changes. Verify that Roth IRA MAGI limits, medical expense thresholds, and RMD penalty rates align with 2017 tax regulations.
Ensure the correct Form 5329 parts were completed and the total additional tax was transferred accurately to Form 1040. A careful review reduces the risk of IRS notices or correction requests.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
