Common questions about Form 5329 Retirement Plan Taxes in Lacerte

1. Go to Screen 41.1, Retirement Plan Taxes (5329)
2. Scroll down to the Excess Contributions to Traditional IRA section
3. Enter the amount in, 2021 excess contributions code 1 (Taxpayer) or code 51 (Spouse)

Distributions from a Roth IRA are generally non-taxable.  However, when a taxpayer converts basis from a Traditional IRA to a Roth IRA, the amount is taxable over a certain period after the conversion.

To enter a Roth IRA distribution with code J that is subject to the additional 10% tax, as calculated on the Form 5329:

1. Navigate to Screen 13.1, Pensions, IRAs
2. Enter the Name of payer
3. Open the Distribution code #1 drop-down menu
4. Select distribution code J from the drop-down list
5. Mark the checkbox for IRA/SEP/SIMPLE
6. Enter the Gross Distribution amount
7. Navigate to Screen 24, Adjustments to Income
8. Locate the Roth IRA section
9. Enter in the Basis in Roth IRA conversions as of 12/31/19
10. Navigate to Screen 41, Retirement Plan Taxes
11. Select Early Roth Distributions (5329) from the left navigation panel
12. Enter the Year of distribution or conversion
13. Enter the Taxable amount of conversion.

Note: Should the Roth IRA already have a basis when the prior year conversion took place, enter the amount of that basis in Screen 41.2, Early Roth Distributions in the field Basis in conversion.

The above entries will prompt Lacerte to generate Form 8606 and Form 5239.

1. Go to Screen 41, Retirement Plan Taxes.
2. In the section Excess Contribution to Traditional IRA, an entry is required in Maximum contribution allowable less contribution made.
3. Enter the excess contribution made in 2021 excess contributions.
4. Enter the Total Value of the IRA.
5. This will generate Form 5329 with the appropriate tax for the excess contribution.