Updated October 17, 2026. Quick answer: Exception code 06 on Form 5329 is for money paid out of a qualified retirement plan to an alternate payee under a qualified domestic relations order, known as a QDRO. The instructions say it does not apply to IRAs. You enter the amount on line 2 and write 06 in the space provided.
Related reading on this site: IRS Tax Topic 558.
What code 06 says
Form 5329 Part I is where the additional tax on early distributions is figured, and line 2 is where you show the part of an early distribution that is not subject to it. The instructions list each reason as a numbered exception, and a payment to an alternate payee under a QDRO is number 06. Part I itself opens by saying “You may also have to complete this part to indicate that you qualify for an exception to the additional tax on early distributions”.
The instructions describe exception 06 in one sentence: “Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (doesn’t apply to IRAs).”
What a QDRO is
Publication 575 defines the order. “A QDRO is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of a participant in a retirement plan.”
It also says what the order has to contain: “The QDRO must contain certain specific information, such as the name and last known mailing address of the participant and each alternate payee, and the amount or percentage of the participant’s benefits to be paid to each alternate payee.” The alternate payee is the person named to receive part of the participant’s benefits. What an order must say is explained on what a QDRO must say.
Where the exception shows up in the Publications
Publication 575 lists the exception among the additional ones for qualified plans. It begins “The 10% additional tax doesn’t apply to distributions that are:” and one entry on the list reads “From a qualified retirement plan to an alternate payee under a QDRO”.
Publication 575 also says the person who receives the money is treated as if they were the participant: “A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if they were a plan participant.”
Only qualified plans, not IRAs
The wording of code 06 limits it to a qualified retirement plan, and its closing words are “(doesn’t apply to IRAs)”. If the money came from an IRA, this code is not the one that describes it. Some of the other codes on the same list are written for IRA distributions instead; the list is mapped on the early withdrawal penalty exceptions page. For how an IRA relates to a QDRO, read why an IRA cannot be split by a QDRO.
A rollover is a different path
Publication 575 also covers the choice to move the money instead of spending it: “You may be able to roll over tax free all or part of a distribution from a qualified retirement plan that you receive under a QDRO.” It adds “If you receive the distribution as an employee’s spouse or former spouse (not as a nonspouse beneficiary), the rollover rules apply to you as if you were the employee.” The effect of a rollover on this exception is the subject of the QDRO penalty exception and rollovers.
How to claim it on Form 5329
Start on line 1 with the early distribution that is included in your income. The instructions for line 1 say “Enter the amount of early distributions includible in income”. Then use line 2.
The instructions for line 2 begin: “Enter on line 2 the amount that you can exclude.” They continue: “In the space provided, enter the applicable exception number”. For this page the number is 06. If you have several reasons, the instructions say “If more than one exception applies, enter 99.” That case is covered on exception code 99.
Where it goes next
Line 2 feeds the lines below it. The form’s caption for line 3 reads “Amount subject to additional tax. Subtract line 2 from line 1”. The caption for line 4 reads “Enter 10% (0.10) of line 3. Include this amount on Schedule 2 (Form 1040), line 8”. So whatever you exclude on line 2 comes out of the amount that line 4 multiplies. The whole of Part I is walked through on the Part I lines 1 to 4 page.
If you are married and both of you must file the form, the instructions say “If both you and your spouse are required to file Form 5329, complete a separate form for each of you.” They add “Include the combined tax on Schedule 2 (Form 1040), line 8.”
Edition and line numbers
This page reads the 2025 Form 5329 and its 2025 instructions, and the 2025 returns edition of each IRS Publication it cites. They are the current files irs.gov served on 2026-10-17, for the tax year 2025 return filed in 2026. Check the tax year printed on the form you are filling in and use the line numbers and exception numbers on that year’s form, because a different year’s form can number or word them differently. For the wider picture, see Form 5329 explained and the overview of early withdrawal penalty exceptions.
Common mistakes
- Using code 06 for an IRA. The instructions describe it as covering qualified retirement plan distributions “(doesn’t apply to IRAs).”
- Using code 06 when you are the plan participant rather than the person named in the order. The code is for “distributions made to an alternate payee under a qualified domestic relations order”.
- Leaving the number off line 2. The instructions say “In the space provided, enter the applicable exception number”, so line 2 needs both the amount and the exception number.
Related: What a QDRO must say, Why an IRA cannot be split by a QDRO, The QDRO penalty exception and rollovers, and QDRO checklist before you sign.
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Answer againSources
- Instructions for Form 5329 (2025): https://www.irs.gov/pub/irs-pdf/i5329.pdf
- Form 5329 (2025): https://www.irs.gov/pub/irs-pdf/f5329.pdf
- Publication 575, Pension and Annuity Income (for 2025 returns): https://www.irs.gov/pub/irs-pdf/p575.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.