Question

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Section 8 Question 26 of 30. Rose files Form 5329 with her tax return. Part 1 of the form has been completed and shows a code 3 on line 2. There are no other entries on the form. Which of the following statements best describes why Rose would include this form with her 2018 return? She turned 55 years old during the tax year and received a retirement plan distribution after separating from service. She wants to report an exception to the early distribution penalty. Rose received a retirement plan distribution due to a permanent and total disability. She wants to report an exception to the early distribution penalty. Rose received a retirement plan distribution for unreimbursed medical expenses during the year that exceeded 7.5 % of her adjusted gross income (AGI) for the year. She wants to report an exception to the early distribution penalty. ORose received a distribution from her IRA which she used to purchase her first home. She wants to report an exception to the early distribution penalty. Mark for follow up

Answer 1

B) Rose received a retirement plan distribution after separating from service. She wants to report an exception to the early distribution.

Part 1 of Form 5329 applies in additional tax on early distribution and code 3 is an exception to additional tax on early distribution in case of distribution due to total and permanent disability.

Option a) is incorrect because code 1 on line 2 applies to an  exception to additional tax on early distribution mentioned in option.

Option c) is incorrect because code 5 on line 2 applies to exception to an additional tax on early distribution mentioned in option.

Option d) is incorrect because code 9 on line 2 applies to exception to an additional tax on early distribution mentioned in option.