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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1260
Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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how do you enter form 5329 in turbotax

Resolved Question:

how do you enter form 5329 in turbotax?
Submitted: 3 years ago.
Category: Tax
Expert:  Arthur Rubin replied 3 years ago.

Arthur Rubin :

Let me pull up my copy of TurboTax, and I'll check the details.

Arthur Rubin :

Is this an IRA you rolled the 401(k) into, or an actual rollover 401(k)?

Customer:

thanks

Customer:

this is an IRA that I rolled my 401k into around sept 2010

Customer:

?

Arthur Rubin :

If you withdraw the excess contributions by April 18, there's no penalty. When you enter the 1099-R, it should automatically transfer to the IRA contribution worksheet, and hence to form 5329.

Arthur Rubin :

If that doesn't work, you can correct the IRA contribution worksheet to reflect the withdrawal.

Customer:

I have a 1099-R for the rollover from my 401k from my previous employer

Customer:

I then transferred additional money into the account (which is the excess)

Customer:

Do I enter a new 1099-R?

Customer:

for the contribution/withdrawal?

Arthur Rubin :

No, I found it on the IRA contribution worksheet.

Arthur Rubin :

Line 1 is where you report the additional contributions, and line 6 is where you report the withdrawal of the excess contribution.

Customer:

how do I get to that form?

Arthur Rubin :

I got to it by going into forms mode.

Arthur Rubin :

And selecting "IRA Contribution Worksheet"

Arthur Rubin :

There must be a way of getting to it in interview mode, but it may be easier to find it in forms mode.

Customer:

i found it in the forms mode...but am at a loss as to how to fill it out...do you have any idea on how to get to it in interview mode?

Customer:

also, line 6 doesn't let me report any capital losses to my excess contribution...

Arthur Rubin :

The help screen in interview mode after you report the excess contribution says that entering the 1099-R for the withdrawal should handle it.

Customer:

so, should I create a new 1099-R?

Customer:

also, here is my key confusion

Arthur Rubin :

It also says that if you don't get a 1099-R, you can just re-enter the correct IRA contribution total by subtracting the amount of the withdrawal.

Arthur Rubin :

I'd put supporting documentation on that item, so you don't forget what happened.

Customer:

I submitted $5,000 in excess contributions, than invested that in a security that basically lost all of its value...the remaining value is approx $200. I would like to "withdraw" my excess contribution which amounts to (now) $200 plus a $4800 tax loss

Customer:

this is something I can put on my broker's paperwork, but I can't find the matching tax forms for the reporting of it

Arthur Rubin :

Let me check publication 590 for the correct way to report a loss on an excess distribution. One moment.

Customer:

ok

Arthur Rubin :

It looks as if you can recover the loss. The simplest way to do it is to enter a fake 2011 1099R; with your numbers, box 1 is $200, box 2a is -$4800, and use codes P and 2.

Customer:

Who do I put in as the Payer? myself?

Customer:

also, code P = return of contribution taxable in 2009 (ie not 2010)?

Customer:

shouldn't it be code 8?

Arthur Rubin :

Payer should be the IRA custodian, and when you enter a code P, TurboTax will ask you whether it's a 2010 or a 2011 1099-R. You tell it 2011, so that code P means it's taxable in 2010.

Arthur Rubin :

I'm sorry, you didn't specify which year you withdrew the excess contribution.

Customer:

sorry...I am going to withdraw it tomorrow...

Arthur Rubin :

If it was 2010, you enter a code 8. If 2011, a code P, and TurboTax will ask you which year you meant.

Arthur Rubin :

You can file for an extension and wait for the 1099-R, if you prefer. You should get it shortly.

Customer:

this is frustrating...turbotax doesn't calculate any impact to the taxes due as a result of this (despite the fact that I have a large taxable gain)...

Arthur Rubin :

(give me a moment to reply what you just typed...) The 1099-R will give the precise numbers; you may need to amend the return if your estimate is incorrect.

Arthur Rubin :

Does entering a fake 1099-R remove the penalty on form 5329?

Customer:

it never had me enter 5329...let me go ahead and manually fill that out

Customer:

shouldn't this also cancel out some of my capital gains?

Arthur Rubin :

It should come out as an ordinary loss, rather than a capital loss.

Arthur Rubin :

In regard the 5329, I thought you said you had excess contributions?

Customer:

I guess I don't understand the difference between an ordinary loss and a capital loss...

Customer:

I did...I contributed $5,000 excess...or atleast that is what I understand to have happened...

Customer:

ok...I contributed through my paycheck deductions to my 401k + $5,000 from my bank

Customer:

my understanding is that the contribution limit is $5k in total, so I am over by the amount I contributed of my own money

Arthur Rubin :

Not exactly. Rollovers (direct or indirect) don't count against the $5K limit. Your contribution of $5K is only excess if it exceeds your earned income. If your MAGI (Modified Adjusted Gross Income) is too high, you may be restricted from making a deductible IRA contribution, but not a non-deductible IRA contribution.

Arthur Rubin :

It should be noted that if your $5K was originally reported as a deductible IRA contribution, the withdrawing it reverses that deduction, so it should slightly (because there's only $200 left) increase your tax.

Customer:

I am in the category for 2010 for someone with a MAGI that is too high

Customer:

I have no idea how schwab reported it...I haven't received any paperwork from them w.r.t. this contribution...and they won't know what tax bracket I am in anyway...

Arthur Rubin :

Whether it's a deductible or non-deductible contribution is up to you; Schwab doesn't know. If you look at your IRA contribution entry sheet, you'll see that you have an option to denote the contribution as non-deductible, in whole, or in part.

Customer:

ok, so I need to report it as deductible?

Customer:

in the fake 1099 i created?

Arthur Rubin :

The fake 1099R shouldn't need to specify whether it was deductible. You might have attempted to declare the $5K a deductible IRA on the contribution worksheet, but it sounds as if it wouldn't work.

Customer:

I am very confused and my brain is no longer working

Customer:

you have gone way above and beyond my original question and for that ... thank you very much

Customer:

may I reply to you tomorrow evening and see if we can straighten out this mess?

Arthur Rubin :

OK. I'm not on here 24/7, but I'll try to get back to you as soon as I can, after seeing your reply.

Customer:

thank you

Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1260
Experience: 22 years of tax preparation experience, including individual, trust, and estate returns.
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