Form 5329 (2018) Instructions Checklist

early distributions, excess contributions, and missed minimum distributions. This checklist supports tax returns prepared with Form 1040 and IRS Form 5329, using Federal Form 1099-R inputs and keeping records consistent with federal tax laws.

Many rules reference qualified retirement plans, qualified plans, and individual retirement arrangements, including traditional IRAs and Roth IRAs, as well as specific endowment contracts. Guidance often appears on the IRS website and in Publications 590-A, 590-B, 575, and 560, which clarify the mechanics of reporting distributions from individual retirement arrangements.

Before the Checklist: Information to Gather First

Collect IRS Form 1099-R for pension and annuity income, plus IRA custodians' statements for each retirement account, including an inherited IRA, Thrift Savings Plan, or in-service withdrawal program. Confirm each taxable amount by distribution code, including Distribution

Code 1 and Code G, and keep the Social Security Number details identical across Form 1040 and IRS Form 5329.

If Coverdell ESAs, a Coverdell Education Savings Account, 529 accounts, or an ABLE account apply, retain records showing taxable allocations, qualified expenses, and earnings computations. If a Health Savings Account or Archer MSA is involved, include Federal Form

8853 support, employee contributions, catch-up contribution rules, and any court orders affecting distributions or ownership.

Ten-Step Checklist for Form 5329 (2018)

1. Step 1: Confirm whether Form 5329 is required

   Use Form 5329 when additional taxes apply to early distributions, excess contributions, or minimum required distributions, especially when exceptions are claimed, and codes do not match. If both spouses need it for the same tax year, each spouse completes a separate IRS

   Form 5329, even when filing a single Form 1040 return.

2. Step 2: Identify early distributions subject to additional taxes

   Early distributions are generally measured by the distribution date and age 59½, so timing uses actual payment dates rather than year-end age. These rules apply to qualified retirement accounts, retirement plans, and individual retirement arrangements, including traditional IRAs,

   Roth IRAs, and some employer-qualified plans.

3. Step 3: Determine the taxable amount for Part I

   Part I starts with early distributions included in federal income tax, often guided by Form 1099-R box 2a, but confirmed using instructions. If nondeductible IRAs exist, taxable portions may require Form 8606 workpapers because basis recovery rules affect what portion enters IRS

   Form 5329 calculations.

4. Step 4: Claim exceptions using numbered entries

   Exceptions are claimed with the numbered list required for 2018, and letter-coded systems should not be used because they create processing mismatches. Common exceptions include death benefits, disability, and a first-time homebuyer distribution for eligible IRAs, with documentation retained for Internal Revenue Service review.

5. Step 5: Compute additional taxes on early distributions

   Compute the ten percent additional taxes on amounts remaining after exceptions, and separately compute any SIMPLE IRA portion subject to the higher rate. This calculation uses a fixed percentage, not marginal brackets, so records should clearly support the taxable amount and the exception portion for audit defense.

6. Step 6: Apply Roth conversion and recapture. Amount rules

   Under the Tax Cuts and Jobs Act of 2018, Roth conversions generally cannot be recharacterized, so taxpayers should not search for reversal entries on IRS Form 5329. If a recapture amount applies to Roth IRA distributions, follow the instructions and keep conversion history, basis support, and distribution records aligned with Internal Revenue Code rules.

7. Step 7: Identify Excess contributions across account types

   Excess contributions occur when IRA contributions or deposits exceed the limits and remain at year-end, affecting traditional IRAs, Roth IRAs, and other covered accounts. Covered accounts may include a Health Savings Account, an Archer medical savings account, a Coverdell ESA, and an ABLE account, each with its own excise tax computation.

8. Step 8: Use the correct parts for excess contribution taxes

   Report traditional IRA excess contribution taxes in Part III and Roth IRA excess contribution taxes in Part IV, following the 2018 line structure. Do not report IRA excess items in Part II, because Part II addresses distributions from taxable education savings accounts, including

   Coverdell Education Savings Accounts, 529 accounts, or ABLE accounts.

9. Step 9: Confirm Required Minimum Distribution compliance

   Determine whether a required minimum distribution was required for 2018, using the required beginning date rules and year-end balances that drive minimum distributions. If mandatory

   distributions are missed, Part IX imposes a 50% excise tax on the shortfall, unless waiver documentation supports reasonable error and corrective actions.

• Full IRS transcript retrieval (Wage & Income + Account)
• Professional tax form review
• Preparation & filing support
• Tax relief options if you owe the IRS

10. Step 10: Transfer totals to the correct return lines and retain support

    Transfer the computed additional taxes to the correct Form 1040 line for 2018, and use Form

    1040NR line instructions when nonresident filing applies. Retain Federal Form 1099-R, Form

    8606, Publication 590-A references, and any state tax notes, including California Revenue and

    Taxation Code differences, where state conformity differs.

    Closing Notes and Recordkeeping Reminders

    When assembling support for Form 5329 for the 2018 tax year, keep a single file that includes

    IRS Form 1099-R, custodian statements, exception evidence, and minimum required distribution calculations. Documentation should be strong enough to withstand Internal Revenue

    Service questions, including My Account transcript reviews, without relying on unrelated coronavirus-related distribution rules from later legislation.

    For filings that include distributions from pensions, confirm that totals match what is reported as pension and annuity income on the return, and keep clear notes showing how each exception code was applied. When using IRS forms, save a clean PDF file copy of the completed return package, along with proof of submission, payment records, and any refund confirmation tied to direct deposit.

    For complex situations involving endowment contracts, multiple retirement plans, or mixed distribution code reporting, cross-check Publication 590-B and Publication 575 for clarity. If the taxpayer is also reporting ABLE-related activity, retain program records for the California

    Qualified ABLE Program and the California Achieving a Better Life Experience Program so the overall documentation set stays complete and consistent with the tax return.

    If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.