Client took out some money from an IRA for education. I would think this would qualify for the 10% exception on the penalty. Not sure how to report this. On the 1099R and then what? What part of the form 5329 should I fill out?
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Just read each line on the 5329 and it will be obvious to you. It is toward the top quarter page.Originally posted by zeros View PostThis post is for discussion purposes only and should be verified with other sources before actual use.
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Change Distribution Code?
Do I change the distribution code on the 1099R or just leave that alone and fill out the appropriate lines on the 5329?Comment
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Cannot change the distribution code
on the 1099R. Your software will remove the penalty, but the payer has already reported the "code 1" to the IRS and you haven't changed their records, only your own.
There is a place on the 5329 where several codes are listed to exempt your client from the penalty. I don't know how your software lists these exemptions, but these codes will be listed somewhere, and you can choose the one for education.Comment
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