The following informational diagnostic is generating in the Individual return of ProConnect:
Pensions, IRA #X: This distribution may need to be included on the taxpayer's Form 5329 and subjected to early retirement distribution tax if it was made prior to reaching age 59 1/2, unless an exception is met. Ref #526
How do I resolve this diagnostic?
This diagnostic is informational only. It generates to alert you that Form 5329 may be required for the return. It generates when you enter a pension or IRA distribution with code 8, code B, or code L.
Refer to the IRS Instructions for Form 5329 to determine whether the form is required.
Follow these steps to clear this diagnostic:
- From the Input Return tab, go to Income ⮕ Pensions, IRAs (1099-R).
- Select the Form 5329 tab at the top of the input screen.
- If Form 5329 is required, enter the applicable number in Early distribution tax 1=10%, 2=25% (SIMPLE), 3=suppress [O].
- If Form 5329 isn't required, check the box to Suppress Form 5329 (filing not required).