!099-R CODE 1

[MargaretMort]

Client was prematurely "retired" two years ago. He was 59 this past September. Rolled his retirement into an IRA, took two disbursements in 2009. The program isn't figuring the 10% penalty for premature disbursement. What am I doing wrong? Has to be me, right?

Thanks for any help. MM

[kcjenkins]

Was the Code 1 on the initial distribution from his retirement, or on the disbursements from the IRA he rolled it into? I'm assuming it is showing as taxable, right? Just not including the penalty? Check to be sure you have his age entered correctly, of course. Then check over the upper and lower boxes on the 1099R to be sure that there is not a box accidentaly checked that should not be checked.

[MargaretMort]

His birthday is correct and I don't see anything on the two 1099s he received that shouldn't be there. I looked back at 2008, he made a direct rollover to a qualified IRA from a company pension plan.

He won't be 59½ until March 2010 so I assume the program should calculate the penalty but it didn't. MM

[kcjenkins]

Well, the only thing else I can think of is one I had last year, where I had accidentally checked the box at the top for spouse. I don't know how or when, but she was older than him, so it was not calculating the penalty. Other than that, I can not think of any reason, so I'd just add the 5329, go to the line 1 tab at the bottom, and manually enter the amount on line 1 of the worksheet there. It's not an override that way.

[MargaretMort]

Makes good sense to me. Will do that. Many thanks. MM

[MargaretMort]

Wow, finally got back to doing taxes today and figured the 10% penalty. He had 10% withheld which covered his basic taxes with a tiny bit left over. Now he owes that 10% again. Sure am going to hate to tell him that. MM

[bigdadder]

If you fill in (2a) the taxable amount it should generate 5329 and generate the penalty.

I had the same situation last evening.

Bigdadder

[MEHCPA]

I have this same problem, early distribution, but the 1099R box 2a is blank. So my choice is to enter something on the input sheet that's different from the 1099R received, or override box 1 on the 5329. I'm waiting on a response from ATX.

If you fill in (2a) the taxable amount it should generate 5329 and generate the penalty.

I had the same situation last evening.

Bigdadder

[kcjenkins]

Adding the taxable amount that you have determined is not, in my understanding, an override. Rather it is just us doing our job. Box 2a is often empty, and I fill it in routinely, when the full amount is taxable. I only use the 5329 when it's not all taxable, and the code is needed for the amount excluded.