Form 5329 reports the additional taxes on tax-favoured accounts: the 10% tax on early distributions, the 6% yearly tax on excess contributions to IRAs, HSAs and similar accounts, and the 25% tax on a missed required minimum distribution. As of October 2026 it's also the form you use to claim an exception to the early-withdrawal tax when your Form 1099-R doesn't show one.
Most people meet this form after something went slightly wrong: a withdrawal before 59½, too much put into an IRA, or an RMD that never happened. The good news is that two of those three can be fixed cheaply if you move fast. The rules here come from the IRS's 2025 instructions and the 2025 form itself.
The four taxes on Form 5329
| Problem | Additional tax | Where on the form |
|---|---|---|
| Early distribution from a retirement plan or IRA | 10% of the taxable amount | Part I |
| SIMPLE IRA payout within 2 years of first joining the plan | 25% instead of 10% | Part I |
| Excess contributions (traditional IRA, Roth IRA, Coverdell ESA, Archer MSA, HSA, ABLE) | 6% for each year it stays in | Parts III to VIII |
| Missed required minimum distribution | 25%, cut to 10% if corrected in time | Part IX |
When you can skip the form
If box 7 of every Form 1099-R correctly shows code 1 and you owe the 10% tax on the whole amount, you don't need Form 5329. You report the tax straight on Schedule 2 (Form 1040), line 8. You need the form when you're claiming an exception that the 1099-R doesn't show, or when the exception covers only part of the payout.
If you rolled part of a distribution over, the rolled-over part isn't subject to the 10% tax at all.
Exceptions to the 10% tax worth knowing
Line 2 takes an exception number from 01 to 23 (or 99 if more than one applies). A few of the common ones:
- 01: payouts from a workplace plan (not an IRA) after you leave a job in or after the year you turn 55
- 02: a series of substantially equal periodic payments
- 03: total and permanent disability
- 05: plan payouts up to your unreimbursed medical expenses above 7.5% of AGI
- 08: IRA payouts for qualified higher education expenses
- 09: IRA payouts to buy a first home, up to $10,000
Notice how many of these apply only to IRAs or only to workplace plans. Exception 01 doesn't work for an IRA, and exception 09 doesn't work for a 401(k). That mismatch is behind a lot of unexpected bills.
Excess contributions: fix them before the deadline
For 2025, the traditional IRA limit was the smaller of your taxable compensation or $7,000 ($8,000 if you were 50 or older at the end of the year), shared with Roth contributions. Go over it and the 6% tax applies to the smaller of the excess or the account value on December 31, every year until it's sorted.
You can avoid it. Withdraw the excess, plus what it earned, by the due date of your return including extensions, and it's treated as never contributed. If you were under 59½, the earnings are reported as an early distribution. The figures are the ones in the 2025 instructions as of October 2026.
Missed RMDs: the 25% tax and the correction window
The standard tax on a shortfall in a required minimum distribution is 25%. It drops to 10% if, during the correction window, you take out the amount you should have taken and file a return showing the tax. The window closes on the earliest of three dates: when the IRS mails a deficiency notice, when the tax is assessed, or the last day of the second tax year after the year the tax was imposed.
The IRS can also waive the tax completely if you show the shortfall was due to reasonable error and you're taking steps to fix it. To ask, attach a statement of explanation and write RC and the shortfall you want waived next to line 54a or 54b.
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Roth IRA payouts and the conversion recapture rule
Roth IRAs bring their own wrinkle. You must file Form 5329 if a Roth IRA distribution leaves an amount on line 25c of Form 8606, if it was a qualified first-time homebuyer distribution, or if it includes a recapture amount.
Recapture works like this. An early Roth distribution is treated as coming from your regular contributions first, then from conversions and rollovers, oldest first. If any of it lands on the taxable part of a conversion or rollover made in the last five tax years (2021 through 2025 for a 2025 return), that slice is the recapture amount and it goes on line 1, where the 10% tax can apply even though you already paid income tax on the conversion.
In plain terms: converting to a Roth and then pulling the funds out within a few years, before 59½, can still cost the 10%. The Form 8606 figures feed straight into this calculation.
How to file it
- Attach Form 5329 to Form 1040, 1040-SR, 1040-NR or 1041 by the return's due date, including extensions.
- If you don't need a tax return, file Form 5329 on its own at the time and place you'd have filed. It can't be e-filed on its own.
- Put your address on page 1 and sign and date page 3.
- Keep your Form 1099-R and Form 5498 with your copy.
The verdict
Form 5329 rewards speed. An excess contribution pulled out before your filing deadline costs nothing extra, and a missed RMD taken during the correction window drops from 25% to 10%. If you spot either problem, fix the account first and do the form second.
Frequently asked questions
Do I always need Form 5329 for an early withdrawal?
No. If code 1 is correctly in box 7 of every Form 1099-R and you owe the 10% on the full amount, report it on Schedule 2, line 8 instead.
How much is the excess contribution tax?
It's 6% of the smaller of the excess or the account value on December 31, for each year the excess stays in the account.
Can the missed RMD tax be reduced?
Yes. It's 25% but falls to 10% if you correct the shortfall and file during the correction window, and the IRS can waive it for reasonable error.
Can I e-file Form 5329 by itself?
No. When you file it without a tax return, it has to go on paper to where you'd have filed your return.
