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Form 5329: Additional Taxes on Retirement Plans

By The Ledgerism Editorial Team · The Ledgerism Brief Editorial Team produces original, methodology-disclosed accounting and tax research—data trackers, databases, and reference guides built to be the most-cited source in the field. Every figure is verified against primary sources including FASB, the IRS, the PCAOB, NASBA, the AICPA, and state boards of accountancy.

Form 5329 is the IRS form you file to report and calculate additional taxes on retirement and tax-favored accounts: the 10% penalty on early withdrawals, the 6% tax on excess contributions, and the excise tax on a missed required minimum distribution (RMD). You attach it to Form 1040 when one of these situations applies, and you also use it to claim an exception to the 10% penalty or to request a waiver of the RMD penalty.

If none of these events apply to you in a tax year, you do not file Form 5329. The form has nine parts, and you complete only the parts that match your situation. Below we cover the three most common triggers, with the current thresholds and the full exception list.

What is Form 5329 used for?

Form 5329, “Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts,” reports extra taxes that sit on top of ordinary income tax. It covers early-distribution penalties, excess-contribution excise taxes, and missed-RMD penalties across IRAs, 401(k)s and similar plans, Coverdell ESAs, 529 plans, ABLE accounts, Archer MSAs, and HSAs. You file it with your Form 1040 for the year the event occurred.

The form is split into nine parts, and you fill in only the ones that apply. Parts I and II handle early or non-qualified distributions. Parts III through VIII handle excess contributions to different account types. Part IX handles a missed RMD. Each part stands alone, so many filers complete just one.

The 10% early-withdrawal penalty (Part I)

Money pulled from a traditional IRA or an employer plan before age 59½ generally triggers a 10% additional tax on the taxable amount, on top of regular income tax. Part I of Form 5329 calculates this penalty. It applies to most IRAs and qualified plans, and the rate can rise to 25% for SIMPLE IRA distributions taken within the first two years of participation.

The 10% is a flat surtax on the taxable portion of the distribution, not a bracket. A $20,000 early IRA withdrawal with no exception adds a $2,000 penalty to whatever income tax the $20,000 already generates. You report the taxable amount, subtract any exception-eligible amount, and apply 10% to the rest.

Your Form 1099-R codes the distribution. Code 1 signals an early distribution with no known exception, which is what usually prompts the form. If an exception applies but the payer did not code it, you use Form 5329 to claim it rather than paying the penalty by default.

Exceptions to the 10% penalty

The tax code lists more than 20 exceptions that reduce or remove the 10% early-distribution penalty. You enter the exempt amount and a two-digit exception number on Part I, line 2. Several exceptions were added or expanded by the SECURE 2.0 Act and took effect in 2024 and 2025, including emergency personal expenses, domestic abuse, and terminal illness. The table below lists the current exceptions and their key limits.

Note the scope limits: several exceptions apply only to IRAs (higher education, first home, unemployed health insurance), while the age-55 separation and QDRO exceptions apply only to employer plans. Claiming an exception does not remove the ordinary income tax on the distribution, only the 10% penalty.

The 6% excess-contribution tax (Parts III–VIII)

Contributing more than the annual limit to an IRA or other tax-favored account triggers a 6% excise tax on the excess. The tax applies each year the excess amount remains in the account as of December 31, so it can compound if left uncorrected. Parts III through VIII of Form 5329 calculate this 6% tax for traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, HSAs, and ABLE accounts.

For 2025, the IRA contribution limit is $7,000, or $8,000 if you are age 50 or older, combined across traditional and Roth IRAs. If your excess involves a traditional IRA you funded with after-tax dollars, the correction also touches basis tracking, which flows through Form 8606 for nondeductible IRA contributions. Roth eligibility also phases out by income: for 2025 the phase-out begins at $150,000 of modified AGI for single filers and $236,000 for married filing jointly, so a contribution that ignores the phase-out can become an excess contribution.

You can avoid the 6% tax entirely by withdrawing the excess, plus any earnings on it, by the due date of your return including extensions (generally October 15). If you remove it after that, the 6% applies for that year and continues each year until the excess is corrected or absorbed by a later year’s unused contribution room. SECURE 2.0 set a six-year statute of limitations for the excess-contribution tax, running from the return due date for the year of the excess.

The missed-RMD penalty (Part IX)

Failing to take a required minimum distribution triggers an excise tax on the shortfall, calculated in Part IX. The SECURE 2.0 Act cut this penalty from 50% to 25% starting in 2023, and it drops to 10% if you correct the shortfall within the correction window. RMDs generally begin at age 73 for account owners, though the specifics can vary by plan type and by whether the account was inherited. Aggregate plan-level RMD and participant data sit in the 401(k) and retirement plan report.

The correction window for the reduced 10% rate runs until the earliest of three dates: the IRS mails a notice of deficiency, the IRS assesses the tax, or the last day of the second tax year after the year the RMD was due. For most people the third date controls, so a missed 2025 RMD generally must be taken by December 31, 2027 to qualify for 10% instead of 25%.

You can also request a full waiver on Form 5329. If the shortfall was due to reasonable error and you have taken steps to make it up, you take the missed distribution, complete Part IX to show the math, and attach a statement explaining the error. In many cases the IRS grants the waiver, but the request depends on your facts and is not guaranteed.

How to file Form 5329

Form 5329 attaches to your Form 1040 for the year the event occurred. If you already filed and later discover a missed RMD or an unclaimed exception, you can file Form 5329 by itself for that year, signed and dated, without amending the whole return in some cases. Filing the form is how you either pay the additional tax or formally claim an exception or waiver.

1. Identify which parts apply (early distribution, excess contribution, missed RMD).
2. Enter the taxable or excess amount on the relevant part.
3. For Part I, subtract any exception amount and record the exception number.
4. For Part IX, calculate the shortfall and, if requesting a waiver, attach a statement and take the missed distribution.
5. Carry the resulting additional tax to Schedule 2 of Form 1040.

Filing on time matters because several penalties compound annually until corrected. A large early distribution can also raise your total tax enough to require estimated tax payments or trigger the underpayment penalty on Form 2210, so coordinate the withdrawal with your withholding for the year.

Frequently asked questions

Do I have to file Form 5329 every year?

No. You file Form 5329 only for a tax year in which a triggering event occurs: an early distribution subject to the 10% penalty, an excess contribution subject to the 6% tax, or a missed RMD. If none of these apply, you skip the form entirely. Some situations, such as an uncorrected excess contribution, can require filing in multiple consecutive years until the excess is resolved.

What happens if I do not file Form 5329 when I should have?

The additional tax still applies, and interest and failure-to-pay penalties can accrue on the unpaid amount. For missed RMDs, SECURE 2.0 created a three-year statute of limitations that starts running only when you file the form or your return, so not filing can leave the assessment window open longer. Filing the form, even late, is generally better than ignoring the obligation.

Can I get the 10% early-withdrawal penalty waived?

The 10% penalty is not waived at IRS discretion, but it does not apply if you qualify for one of the statutory exceptions on Part I, such as disability, medical expenses above 7.5% of AGI, a first home (up to $10,000 for IRAs), or a qualified birth or adoption (up to $5,000). You claim the exception by entering the exempt amount and the exception number. Ordinary income tax on the distribution still applies.

How do I request a waiver of the missed-RMD penalty?

Complete Part IX of Form 5329, take the missed distribution as soon as possible, and attach a statement explaining that the shortfall was due to reasonable error and describing the steps you took to correct it. You report the shortfall and calculate the tax, but you can request that the IRS waive it. In many cases the IRS grants the waiver, though the outcome depends on your specific facts.

Is the SIMPLE IRA early-withdrawal penalty always 10%?

No. Distributions from a SIMPLE IRA taken within the first two years of your participation carry a 25% additional tax instead of 10% if no exception applies. After the two-year period, the standard 10% early-distribution rules apply. The two-year clock starts on the date you first participated in the plan, not the plan year.

Does an exception remove the income tax on my withdrawal?

No. The exceptions on Part I remove only the 10% early-distribution penalty. The taxable portion of a traditional IRA or pre-tax plan distribution is still subject to ordinary income tax at your regular rates. Roth basis (your own contributions) generally comes out tax-free and penalty-free, but earnings withdrawn early can be taxable and penalized without an exception.

Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.

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