Preparing Form 5329: Waivers for Missed or Incorrect RMDs, Excess Contributions, Exceptions for Early Withdrawals

A live 110-minute CPE webinar with interactive Q&A


Thursday, January 27, 2022

1:00pm-2:50pm EST, 10:00am-11:50am PST

Early Registration Discount Deadline, Friday, January 7, 2022

or call 1-800-926-7926

This webinar will discuss properly preparing Form 5329, Additional Taxes on Qualified Plans, to request a waiver for missed or incorrect required minimum distributions (RMDs), preparing the Form 5329 for multiple years for excess contributions to qualified plans, and requesting abatement of penalties for early distributions from IRAs and 401k plans.

Description

Form 5329 can provide welcomed relief or extraordinary penalties depending on a taxpayer's circumstances. The rules for required minimum distributions (RMDs) are complex. Recently, they have been modified by the SECURE Act while the CARES Act waived these distributions for 2020. It is not surprising that taxpayers often miss RMDs or fail to withdraw the proper amount.

The penalties for these oversights are steep--50 percent of any amount that was not properly distributed. Filing Form 5329 to request a waiver could provide relief from this exorbitant penalty. However, the steps involved are not clear-cut and are not evident from the instructions.

Excess contributions to qualified plans reap similar results. Excess contributions are subject to a six percent excise tax that continues annually until the overfunded amount is withdrawn. These penalties can result from excess contributions to traditional or Roth IRAs, health savings accounts (HSAs), education accounts, and other qualified plans.

The taxpayer must file Form 5329 and pay the penalty every year the excess amount remains in the tax-favored account. Not filing Form 5329 when required can prevent the statute of limitations from tolling on a taxpayer's individual income tax return. Understanding when and how to correctly complete Form 5329 is critical for tax practitioners working with individual taxpayers.

Listen as our qualified plan expert explains how to complete Form 5329 to facilitate the abatement of penalties for early withdrawals, excess contributions, and missed or incorrect RMDs from qualified plans.

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Outline

  1. Form 5329, Additional Taxes on Qualified Plans
  2. Incorrect and missed RMDs
    1. RMD requirements
    2. Applicable penalties
    3. Requesting a waiver
  3. Excess contributions to qualified plans
    1. Making the withdrawal
    2. Making the correction in the current or subsequent year
    3. Filing annual Form 5329s
  4. Exceptions to early distribution penalties
  5. Tolling of the statute of limitations
    1. Form 5329
    2. Form 1040
  6. Best practices

Benefits

The speaker will review these and other critical issues:

  • Filing yearly Forms 5329 for excess contributions to retirement plans
  • Differences in penalty exceptions for IRAs and 401k plans
  • Preparing Form 5329 to request a wavier for missed RMDs
  • Unfiled Forms 5329 and the tolling of the statute of limitations

Faculty

Pon, Lawrence
Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP

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Pon & Associates

Mr. Pon has been in practice since 1986 providing comprehensive tax and financial planning, tax preparation and...  |  Read More

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