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Form 5329 Exception Code 23: Emergency Expense Distributions

Updated October 17, 2026. Quick answer: Exception code 23 is the number you write on Form 5329 line 2 for an eligible emergency expense distribution, one taken to meet unforeseeable or immediate financial needs for necessary personal or family emergency expenses. The publications limit how much and how often. You enter the amount you can exclude on line 2 and the number 23 in the space provided.

What code 23 says

The instructions describe code 23 in two sentences: “Distributions for eligible emergency expense distributions.” and “A distribution from an applicable eligible retirement plan for the purposes of meeting the unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.” The instructions point to “See Notice 2024-55” for more. The same Notice covers exception code 22, and the reasons that can avoid the tax are collected on the early withdrawal penalty exceptions page. The form is mapped in Form 5329 explained.

What Publication 590-B says about IRAs

Publication 590-B lists the situation among the exceptions: “The distribution is for certain emergency personal expenses.” Its definition matches the instructions: “An emergency personal expense distribution is a distribution from an applicable eligible retirement plan for the purposes of meeting the unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.”

Publication 575 gives the headline rule for pensions and annuities: “a distribution to an individual for certain emergency personal expenses is not subject to the 10% additional tax on early distributions if certain requirements are met.”

The yearly dollar limit

The limit for an IRA is stated in running prose: “You are limited to taking one emergency personal expense distribution per calendar year and the amount that may be treated as an emergency personal expense distribution must not exceed the lesser of $1,000 or your total interest in the IRA minus $1,000.”

For an employer plan Publication 575 says “You are limited to taking one emergency personal expense distribution per calendar year and the amount you are able to distribute is limited to $1,000.” The two wordings differ, so check the publication that matches the account the money came from.

Taking another one in later years

Publication 590-B restricts repeat use: “You are also limited in taking emergency personal expense distributions in subsequent years as you may not take this type of distribution in the following 3 calendar years unless:” The first condition it lists is “The previous distribution is repaid, or”. Publication 575 uses the same structure for plans: “You are also limited in taking emergency personal expense distributions in subsequent years as you may not take this type of distribution in the following 3 calendar years unless:”

How to claim it on Form 5329

The instructions say “In general, you must file Form 5329 to report an exception to the 10% additional tax on an early distribution from a qualified retirement plan, including an IRA.”

On line 2 the instructions read “Enter on line 2 the amount that you can exclude.” and “In the space provided, enter the applicable exception number”. For this exception the number is 23. Publication 575 repeats the steps: “On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions.” It also says “You should complete Form 5329 if you meet an exception to the tax on early distributions but box 7 of your Form 1099-R doesn’t indicate an exception.” See the 1099-R box 7 codes page for what the payer may have shown.

Repaying an emergency distribution

Publication 590-B says a repayment may receive rollover treatment: “Contributions made to the eligible retirement plan as a repayment of one of the early distributions listed below may be eligible for taxfree rollover treatment:” and the list names “Emergency personal expense distributions”. The window is “You can make one or more contributions to an eligible retirement plan, including an IRA, during the 3-year period beginning on the day after the date the distribution was received.”

The publication adds a condition and a cap on repayment: you must be a beneficiary of the plan, and “the total amount you repay can’t exceed the amount of the emergency personal expense, domestic abuse victim, or terminally ill individual distributions you received.” A repayment may also bring Form 8606 into play, as described on the Form 8606 page.

Where it goes next

Line 2 feeds line 3. The form’s caption for line 3 reads “Amount subject to additional tax. Subtract line 2 from line 1”. Line 3 then feeds line 4, whose caption reads “Additional tax. Enter 10% (0.10) of line 3. Include this amount on Schedule 2 (Form 1040), line 8”. For couples the instructions add “If both you and your spouse are required to file Form 5329, complete a separate form for each of you.” The Part I lines are walked through on the Part I lines 1 to 4 page, and the Schedule 2 line is covered on the Schedule 2 page.

Edition and line numbers

This page reads the 2025 Form 5329 and its 2025 instructions, and where a Publication is cited, the 2025-returns edition of that Publication. These are the current files irs.gov served on 2026-10-17, and they are the forms for the tax year 2025 return, filed in 2026. The code 23 wording and the dollar limits are as quoted above. 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.

Common mistakes

  • Taking more than one in a calendar year. The publication says “You are limited to taking one emergency personal expense distribution per calendar year”.
  • Treating the whole withdrawal as excluded. The IRA rule says the amount “must not exceed the lesser of $1,000 or your total interest in the IRA minus $1,000.”
  • Writing the number without the amount. The instructions say “Enter on line 2 the amount that you can exclude.”

Related: Form 5329 explained, Early withdrawal penalty exceptions, 1099-R box 7 codes, Form 8606, and Schedule 2 (Form 1040).

Sources

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.

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