Early Distributions

You may decide to receive a cash distribution of some or all of your money in a retirement plan prior to reaching age 59½. If you do, you are usually subject to an additional tax of 10% on the taxable part of the distribution.

How to report early distributions from retirement plans on my tax return?

If distribution code 1 (early distribution) is shown in box 7 of Form 1099-R:

• multiply the taxable part of the early distribution by 10%, then
• enter the result on line 60 of the tax form 1040 and
• write "NO" on the dotted line.

Do I have to file tax form 5329?

You do not have to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and other Tax-favored Accounts. However, if you owe this tax and also owe any other additional tax on a distribution, you must file Form 5329 to report the taxes.

If distribution code 2, 3, or 4 is shown in box 7 of Form 1099-R, you qualify for an exception to the 10% tax without filing form 5329.

When must I file tax form 5329?

You must file Form 5329 if no code or code 1 is shown in box 7 and you meet one of the exceptions.