Form 5329 Exceptions

Distributions from Qualified Tuition Programs (QTP's) or Coverdell Education Savings Accounts (ESA's) made because of attendance by the beneficiary at a U.S. military academy generally are not subject to the 10% additional tax.

The tax on early distributions does not apply to the distributions described below. Please pick the appropriate exception and enter it in the number and the amount of the distribution not subject to additional tax in the spaces provided on the interview screen.

CODE - DESCRIPTION 

01 Qualified employee plan distributions (does not apply to IRA's) if you separated from service in or after the year you reach age 55 (age 50 for qualified public safety employees).

02 Distributions made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from an employer plan, payments must begin after separation from service).

03 Distributions due to total and permanent disability.

04 Distributions due to death (does not apply to modified endowment contracts).

05 Qualified retirement plan distributions up to (1) the amount you paid for unreimbursed medical expenses during the year minus (2) 7.5% of your adjusted gross income for year.

06 Qualified employee plan distributions made to an alternate payee under a qualified domestic relations order (does not apply to IRA's).

07 IRA distributions made to unemployed individuals for health insurance premiums.

08 IRA distributions made for higher education expenses.

09 IRA distributions made for purchase of a first home, up to $10,000.

10 Distributions due to an IRS levy of the qualified retirement plan.

11 Qualified distributions to reservists while serving on active duty for at least 180 days.

12  Other - The following exceptions also apply:

• Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R. Include on line 2 the amount you received when you were age 59 1/2 or older.
• Distributions from a section 457 plan, which are not from a rollover from a qualifid retirement plan.
• Distributions from a plan maintained by an employer if:Distributions that are dividends paid with respect to stock described in section 404(k).
  1. You separated from service by March 1, 1986;
  2. As of March 1, 1986, your entire interest was in pay status under a written election that provides a specific schedule for distribution of your entire interest; and
  3. The distribution is actually being apply to the distributions described below. Enter the amount of early distributions made under the written election.
• Distributions from annuity contracts to the extent that the distributions are allocable to the investment in the contract before August 14, 1982.

For more information see Form 5329 Instructions.  

For additional exceptions that apply to annuities, see Publication 575.