If you owe either the tax on early withdrawals or the tax on excess accumulation of pension funds, you will need to file Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax Favored Accounts.
The additional tax on early withdrawals is calculated in Part I of Form 5329, and the excise tax on excess accumulations (not receiving minimum required distributions) is calculated in Part VIII. Both Form 5329 and the instructions can be downloaded from the IRS website.
Reporting Exceptions for Early Withdrawals
If an exception to the additional tax on early withdrawals applies, and your employer or other payer of the distribution knows of the exception, there should be a distribution code of 2, 3 or 4 shown in box 7 on your From 1099-R. In this case, you would not owe the additional tax and would not have to file Form 5329. If an exception applies, but the payer of the distribution did not know about it, a code 1 will be shown in box 7 of Form 1099-R, indicating that an early distribution was made, with no known exception. In this case, you would have to file Form 5329, report the taxable amount of the distribution shown in box 2a of Form 1099-R on line 1 of form 5329, and then on line 2, enter the amount that can be excluded and the corresponding exclusion number. These are included in the instructions for Form 5329.
Incorrect Distribution Code
If you were 59 ½ years of age or older when you received the distribution, but distribution code 1 is incorrectly reported on your 1099-R, you should file Form 5329, report the distribution as a taxable amount, and then on line 2 show the exclusion, with code 11, corresponding to “Other”.