IRS Form 5329: Early Withdrawal Penalties, Excess Contributions, and Missed RMDs 

IRS Form 5329 is used to report certain additional taxes involving IRAs, retirement plans, and other tax-favored accounts. It is especially important if you took an early retirement distribution, contributed too much to an IRA, or did not take the full required minimum distribution (RMD). 

The form can also be used to claim an exception to the 10% early distribution tax or request a waiver of the tax on a missed RMD when you meet the IRS requirements.  

For taxpayers searching for Form 5329 instructions 2026, there is an important timing point: the IRS has posted a 2026 draft Form 5329 and draft instructions, dated August and September 2026. The IRS says draft forms and instructions should not be filed or relied upon as final guidance. The final version should be checked when preparing a 2026 return.  

What Is IRS Form 5329? 

IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, calculates and reports certain additional taxes on retirement and other tax-favored accounts.  

The form covers several situations, including: 

• Early distributions from retirement accounts  
• Excess traditional IRA contributions  
• Excess Roth IRA contributions  
• Excess contributions to certain other tax-favored accounts  
• Missed required minimum distributions  
• Certain distributions from education accounts  
• Other additional taxes involving qualifying accounts  

Although Form 5329 is often called an early withdrawal penalty form, early withdrawals are only one part of what the form covers. 

What Does Form 5329 Report? 

The form is divided into parts that address different types of additional taxes: 

The exact form and instructions should be checked for the tax year you are filing. 

When Do You Need to File Form 5329? 

You generally file Form 5329 when an additional tax applies and the tax cannot be fully reported another way. You may also need it to claim an exception to the early distribution tax or request relief for a missed RMD.  

Common situations include: 

• You took an early distribution from an IRA or retirement plan.  
• An exception to the 10% additional tax applies, but your Form 1099-R does not show the correct exception.  
• You made an excess IRA contribution.  
• You made an excess Roth IRA contribution.  
• You missed part or all of an RMD.  
• You owe another additional tax covered by Form 5329.  

There is an important exception to the filing requirement. If the 10% additional tax applies to the entire taxable early distribution and your Form 1099-R correctly shows distribution code 1, you may generally report the tax directly on Schedule 2 instead of filing Form 5329.  

What Is the Form 5329 Early Distribution Penalty? 

The Form 5329 early distribution penalty is generally an additional 10% tax on the taxable portion of an early retirement distribution taken before age 59½ when no exception applies.  

This is an additional tax, not a replacement for regular income tax. 

For example, suppose you take a taxable $20,000 distribution from a traditional IRA at age 50 and no exception applies. 

The additional tax would generally be: 

$20,000 × 10% = $2,000 

You may also owe ordinary federal income tax on the taxable distribution. 

Is the 10% Applied to the Entire Distribution? 

Not necessarily. 

The 10% additional tax generally applies to the taxable portion subject to the early-distribution rules, not necessarily every dollar you receive. 

Amounts that are tax-free, properly rolled over, or otherwise excluded from the additional tax may not be subject to the 10% tax.  

How Do You Calculate the Form 5329 10% Penalty? 

The basic calculation is the taxable amount subject to the additional tax multiplied by 10%, after subtracting amounts that qualify for an exception. 

A simplified calculation looks like this: 

Taxable early distribution − qualifying exception amount = amount subject to additional tax 

Then: 

Amount subject to additional tax × 10% = additional tax 

Example: No Exception 

Suppose: 

• Early distribution: $15,000  
• Taxable amount: $15,000  
• Exception: $0  

Calculation: 

$15,000 × 10% = $1,500 additional tax 

Example: Partial Exception 

Suppose: 

• Taxable distribution: $20,000  
• Qualifying exception: $8,000  
• Amount subject to 10% tax: $12,000  

Calculation: 

$12,000 × 10% = $1,200 additional tax 

Actual Form 5329 calculations can be more complex depending on the account, distribution type, and exception involved. 

How Can You Avoid the 10% Early Withdrawal Penalty? 

You may avoid the 10% additional tax when your distribution qualifies for an IRS exception. The exception must meet the specific requirements for your type of retirement account and distribution.  

Some exceptions include: 

• Reaching age 59½  
• Certain substantially equal periodic payments  
• Disability  
• Death  
• Certain unreimbursed medical expenses  
• Qualified higher education expenses for eligible IRA distributions  
• Certain first-time homebuyer distributions from an IRA  
• Certain qualified birth or adoption distributions  
• Certain terminal illness distributions  
• Certain qualified disaster distributions  
• Certain distributions to qualified military reservists  
• Certain distributions under other special statutory rules  
• Not every exception applies to every type of retirement plan. 

For example, the age-55 separation-from-service exception generally applies to qualified employer plans, not IRAs.  

What Are the Form 5329 Exception Codes? 

Form 5329 uses exception numbers to tell the IRS why an early distribution is not subject to the 10% additional tax. The applicable exception number is entered on Form 5329 when required.  

Some commonly encountered codes include: 

The exact requirements matter more than the code itself. Always check the instructions for the applicable tax year. 

What Is Exception Code 02 on Form 5329? 

Exception code 02 applies to certain substantially equal periodic payments made according to IRS requirements. These payments are generally based on your life expectancy or the joint life expectancies of you and your designated beneficiary.  

For employer retirement plans, additional requirements can apply, including a separation-from-service requirement. 

This exception is sometimes associated with 72(t) payments. 

A key point is that you generally cannot start a qualifying payment series and then freely change or stop it. A modification can cause the early-distribution tax to apply under the IRS rules. 

What Is Exception Code 01 on Form 5329? 

Exception code 01 generally applies when you receive a distribution from a qualified retirement plan after separating from service during or after the year you reach age 55. Special rules apply to certain qualified public safety employees and private-sector firefighters.  

This exception is important because it generally does not apply to an IRA. 

For example, leaving an employer at age 56 and taking a qualifying distribution from that employer’s 401(k) may qualify for the age-55 exception. Moving the money to an IRA before taking the distribution can change the tax treatment. 

That is why the type of retirement account matters. 

How Do You Claim an Exception on Form 5329? 

If you qualify for an exception but your Form 1099-R does not properly show it, Form 5329 is generally used to report the exception.  

A typical process is: 

• Review Form 1099-R.  
• Identify the taxable distribution.  
• Determine whether an IRS exception applies.  
• Find the correct exception number.  
• Enter the amount qualifying for the exception.  
• Enter the exception code.  
• Calculate the remaining amount subject to the additional tax.  
• Carry the resulting additional tax to the appropriate part of your federal return.  

Keep documentation supporting the exception with your tax records. 

How Do You Report Excess IRA Contributions on Form 5329? 

Excess IRA contributions are generally reported in Part III for traditional IRAs and Part IV for Roth IRAs when the excess remains subject to the additional tax.  

An excess contribution can happen when you contribute more than the amount allowed for the year or otherwise exceed your contribution limit. 

For 2025, for example, the general IRA contribution limit was $7,000, or $8,000 for people age 50 or older, subject to the applicable rules and limitations.  

What Is the Penalty for an Excess IRA Contribution? 

The additional tax is generally 6% of the excess contribution that remains in the IRA. The 6% tax can apply for each year the excess remains subject to the tax.  

For example: 

• Excess contribution: $1,000  
• 6% additional tax: $60  

If the excess remains in the account for another year, another 6% tax may apply to the remaining excess, subject to the IRS rules. 

Can You Correct an Excess Contribution? 

Often, yes. For an excess contribution made during a tax year, you may generally avoid the 6% tax on that contribution if you withdraw the excess and the related earnings by the applicable tax-return deadline, including extensions where applicable. The earnings generally must also be included in income.  

Do not simply withdraw money and assume the problem is corrected. The timing, earnings, type of account, and prior-year excess amounts can affect the reporting. 

How Do You Report a Missed RMD on Form 5329? 

A missed RMD is generally reported in Part IX of Form 5329, which calculates the additional tax on the amount that should have been distributed but was not.  

The basic concept is: 

Required distribution − actual distribution = RMD shortfall 

The additional tax is then calculated under the applicable RMD rules. 

What Is the Penalty for a Missed RMD? 

Under the current rules reflected in the IRS’s 2025 Form 5329 instructions, the additional tax on an RMD shortfall is generally 25% of the excess accumulation, but it can be reduced to 10% if the taxpayer meets the requirements for the reduced rate.  

For example, suppose: 

• Required RMD: $30,000  
• Amount actually withdrawn: $20,000  
• Shortfall: $10,000  

A 25% calculation would be: 

$10,000 × 25% = $2,500 

If the taxpayer qualifies for the reduced 10% rate under the applicable correction rules, the calculation could instead be: 

$10,000 × 10% = $1,000 

These examples show the calculation method only. The actual amount depends on the tax year, correction timing, and applicable IRS rules. 

Can the IRS Waive a Missed RMD Penalty? 

Yes, the IRS can waive the additional tax when the missed RMD was due to reasonable error and reasonable steps are being taken to correct the shortfall.  

To request the waiver, you generally: 

• Take the missed distribution or otherwise correct the shortfall.  
• Complete Form 5329.  
• Follow the instructions for the waiver.  
• Enter the requested waiver amount as instructed.  
• Attach a statement explaining why the RMD was missed.  
• Describe the steps taken to correct the problem.  

The IRS reviews the request based on the circumstances. 

What Should the Explanation Include? 

Keep the explanation factual and specific. 

For example: 

• Why the RMD was missed  
• When you discovered the error  
• When you contacted the financial institution  
• When the missed amount was distributed  
• What steps you are taking to prevent the problem from happening again  
• Avoid vague statements such as “I forgot” without explaining the circumstances and corrective steps. 

Form 5329 and Form 1099-R: How Do They Work Together? 

Form 1099-R reports retirement distributions from the financial institution, while Form 5329 is used when an additional tax, exception, or other Form 5329 issue needs to be calculated or reported.  

Check Form 1099-R before completing Form 5329. 

Look at: 

• Box 1 — Gross distribution  
• Box 2a — Taxable amount  
• Box 7 — Distribution code  

The distribution code can affect whether Form 5329 is required. 

For example, if the 1099-R correctly reports an early distribution with code 1 and the full taxable distribution is subject to the 10% tax, you may not need Form 5329 and can generally calculate the additional tax on Schedule 2.  

However, if an exception applies but the 1099-R does not reflect it, Form 5329 may be necessary. 

How to Fill Out Form 5329 

Start by identifying which additional tax applies, then complete only the relevant parts of Form 5329. 

Step 1: Gather your tax documents 

Have these documents available: 

• Form 1099-R  
• IRA contribution records  
• IRA statements  
• RMD calculation from your custodian  
• Records of distributions  
• Proof of qualifying expenses if claiming an exception  
• Prior-year Form 5329, if applicable  
• Form 8606, if applicable  

Step 2: Identify the reason for filing 

Determine whether you are reporting: 

• An early distribution  
• An early distribution exception  
• An excess contribution  
• A missed RMD  
• Another additional tax covered by Form 5329  

Step 3: Complete the applicable part 

For an early distribution, start with Part I. 

For excess traditional IRA contributions, use Part III. 

For excess Roth IRA contributions, use Part IV. 

For a missed RMD, use Part IX. 

Step 4: Check your calculations 

Make sure the amount reported on Form 5329 agrees with your supporting documents and other tax forms. 

Step 5: Transfer the additional tax 

When required, the additional tax from Form 5329 flows to Schedule 2 (Form 1040), line 8 under the 2025 instructions.  

The exact line can change in a future tax year, so use the instructions for the year you are filing. 

Can You File Form 5329 by Itself? 

Yes, you can file Form 5329 by itself when you are not required to file an income tax return but still owe an additional tax reported on the form.  

When filed by itself, the IRS instructions say to: 

• Use the correct tax-year form.  
• Include your address.  
• Sign and date the form.  
• File it at the time and place you would have filed Form 1040, 1040-SR, or 1040-NR.  

The 2025 instructions state that a Form 5329 filed by itself cannot be filed electronically.  

If you are filing a prior-year Form 5329, use that year’s version rather than the current form.  

Where Does the Form 5329 Penalty Go on Your Tax Return? 

For the 2025 return, the additional taxes calculated on Form 5329 generally flow to Schedule 2 (Form 1040), line 8.  

Form 5329 itself is attached to your federal return when required. 

This is why you should not treat Form 5329 as a completely separate tax return. It works with your Form 1040 and related schedules. 

The exact line reference can change between tax years, so verify the instructions for the year being filed. 

Common Form 5329 Mistakes 

Most Form 5329 errors happen when taxpayers use the wrong exception, calculate the taxable amount incorrectly, or report an excess contribution or RMD shortfall for the wrong year. 

Using the wrong tax year 

A 2025 Form 5329 should not be used to amend a 2024 return. The IRS instructs taxpayers to use the version for the applicable tax year.  

Applying an exception that does not fit the account 

Some exceptions apply to IRAs, some to employer plans, and some to both. 

The age-55 separation-from-service exception is a common example where the account type matters.  

Using the wrong exception code 

Do not select a code simply because the description sounds similar. Check the specific IRS requirements for that exception. 

Treating all retirement withdrawals as taxable 

A distribution can contain taxable and nontaxable amounts. Rollovers and certain other amounts can also receive different treatment. 

Forgetting the 6% excess contribution tax 

An excess IRA contribution can create a recurring additional tax if it remains uncorrected.  

Assuming an RMD penalty is always 25% 

The current rules can allow a reduced 10% rate when the applicable requirements are met, and a waiver may also be available for reasonable error in qualifying cases.  

Ignoring Form 1099-R codes 

The distribution code in Box 7 can determine whether Form 5329 is needed and whether an exception has already been reported. 

Form 5329 Example: Early IRA Withdrawal 

Consider a taxpayer who is 52 and withdraws $30,000 from a traditional IRA. 

The entire $30,000 is taxable, and the taxpayer does not qualify for an exception. 

The basic additional-tax calculation is: 

$30,000 × 10% = $3,000 

The taxpayer may also owe ordinary income tax on the $30,000 distribution. 

If the taxpayer instead qualifies for an exception covering $10,000, only the remaining $20,000 would generally be subject to the 10% additional tax: 

$20,000 × 10% = $2,000 

The exact Form 5329 calculation depends on the facts and the applicable exception. 

Form 5329 Example: Missed RMD 

Suppose a retiree was required to take a $25,000 RMD but withdrew only $15,000. 

The RMD shortfall is: 

$25,000 − $15,000 = $10,000 

Under the general 25% additional-tax rate, the calculation would be: 

$10,000 × 25% = $2,500 

If the taxpayer qualifies for the reduced 10% rate, the calculation would instead be: 

$10,000 × 10% = $1,000 

The taxpayer may also request a waiver when the missed RMD resulted from reasonable error and the shortfall is being corrected.  

Form 5329 Instructions 2026: What Should You Use? 

For a 2026 tax year return, use the final 2026 Form 5329 and final 2026 instructions once the IRS releases them. 

As of September 24, 2026, the IRS has posted 2026 draft versions of Form 5329 and its instructions. The draft instructions were posted September 8, 2026, and the draft form was posted August 6, 2026. The IRS’s draft-form page clearly states that taxpayers should not file draft forms or rely on draft instructions.  

For reference, the IRS currently provides the final 2025 Form 5329 and instructions for 2025 returns.  

This distinction matters if your article uses the phrase “Form 5329 instructions 2026.” Readers may be searching for information about a 2026 return, but the final IRS instructions should take priority over the draft version. 

Final Takeaway 

IRS Form 5329 is mainly a reporting and calculation form for additional taxes involving retirement plans, IRAs, and other tax-favored accounts. The three situations most relevant to IRA owners and retirees are: 

• Early distributions: generally a 10% additional tax before age 59½ unless an exception applies.  
• Excess contributions: generally a 6% additional tax on excess amounts that remain subject to the tax.  
• Missed RMDs: generally a 25% additional tax on the shortfall, potentially reduced to 10% when the requirements are met, with possible waiver relief for reasonable error.  

The most important step is to identify why Form 5329 is required before entering numbers on the form. Early withdrawals, excess contributions, and missed RMDs use different parts and different rules. 

For a 2026 return, check the final IRS Form 5329 and instructions when available rather than relying on the current draft versions. 

Frequently Asked Questions