Updated October 17, 2026. Quick answer: Part I of Form 5329 figures the additional tax on early distributions. Line 1 is the early distribution that counts as income, line 2 is the part that qualifies for an exception along with the exception number (or 99 if more than one applies), line 3 is line 1 minus line 2, and line 4 is 10% of line 3, or 25% for certain SIMPLE IRA money. The line 4 tax carries to Schedule 2 (Form 1040), line 8.
Retirement forms read line by line: Form 8915-F lines 27 to 32.
What Part I is for
Part I answers one question: how much of an early withdrawal is hit by the extra tax. The instructions open with the rule: “In general, if you receive an early distribution (including an involuntary cashout) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income is generally subject to the 10% additional tax.” The form says who completes it: “Complete this part if you took a taxable distribution” “before you reached age 59½ from a qualified retirement plan (including an IRA) or modified endowment contract”. It also says you “may also have to complete this part to indicate that you qualify for an exception to the additional tax on early distributions”. The overall picture is on Form 5329 explained, and the full list of exceptions is on early withdrawal penalty exceptions.
Do you need Form 5329 at all
Sometimes you can skip the form. The instructions say “if distribution code 1 is correctly shown in box 7 of all your Forms 1099-R and you owe the additional tax on the full amount shown on each Form 1099-R, you don’t have to file Form 5329.” The form itself repeats the idea at the top: “you may be able to report this tax directly on Schedule 2 (Form 1040), line 8, without filing Form 5329.”
When an exception applies, the picture changes. The instructions describe the case where “you meet an exception to the tax on early distributions from the list shown later, but box 7 of your Form 1099-R doesn’t indicate an exception or the exception doesn’t apply to the entire distribution.” Publication 575 says the same thing from the other side: “If an exception applies but distribution code” 1 is shown in box 7, “you must file Form 5329.”
Line 1: the early distribution that counts as income
The form’s caption reads “Early distributions includible in income”. For a plan or IRA distribution, “Enter the amount of early distributions includible in income” from your qualified retirement plan, with the instructions pointing to your Form 1099-R. Publication 575 puts the steps in order: “Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329.”
Roth money has its own rules. For a designated Roth account the instructions say “If you received an early distribution from your designated Roth account, include on line 1 the amount of the distribution that you must include in your income.” “You will find this amount in box 2a of your 2025 Form 1099-R.” For a Roth IRA they say “If you received an early (nonqualified) distribution from your Roth IRAs, include on line 1 the part of the distribution that you must include in your income.” “You will find this amount on line 25c of your 2025 Form 8606.” That form is covered on the Form 8606 page.
Recapture amounts can add to line 1. The instructions say “If you converted or rolled over an amount to your Roth IRAs in 2021 through 2025 and you received an early distribution for 2025, the recapture amount you must include on line 1 is the amount, if any, of the early distribution allocated to the taxable portion of your 2021 through 2025 conversions or rollovers.” The instructions work through the allocation in a full example, which this page does not repeat.
Line 2: the exception amount and the exception number
Line 2 is where an exception shows up. The form’s caption reads “Early distributions included on line 1 that are not subject to the additional tax”. The instructions explain the entry: “Enter on line 2 the amount that you can exclude.” They continue “In the space provided, enter the applicable exception number”, and then “If more than one exception applies, enter 99.” Publication 575 gives the same direction: “On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions.”
The exception numbers are explained one by one on the pages for Form 5329 exception code 01, Form 5329 exception code 02, Form 5329 exception codes 03 and 04 and Form 5329 exception code 05, and the 99 entry is explained on Form 5329 exception code 99. One Roth case sends you to line 2 as well: “A qualified first-time homebuyer distribution from line 20 of your 2025 Form 8606. Also include this amount on line 2 of your 2025 Form 5329 and enter exception number 09.”
Lines 3 and 4: the tax base and the tax
Line 3 is simple subtraction. The form says “Amount subject to additional tax. Subtract line 2 from line 1”. Line 4 then reads “Additional tax. Enter 10% (0.10) of line 3.”
SIMPLE IRA money can raise the rate. The instructions say “If any amount on line 3 was a distribution from a SIMPLE IRA received within 2 years from the date you first participated in the SIMPLE IRA plan, you must multiply that amount by 25% instead of 10%.” They add that “These distributions are included in boxes 1 and 2a of Form 1099-R and are designated with code S in box 7.” The form carries the same warning in a caution under line 4. For that distribution, see also the Form 1099-R code S page.
As an illustration, not an IRS example: suppose line 1 shows $10,000 and an exception covers $4,000 of it, so line 2 is $4,000. Line 3 is $10,000 minus $4,000, which is $6,000. Line 4 at 10% is $6,000 times 0.10, which is $600.
Where it goes next
The line 4 amount leaves Part I. The form tells you to “Include this amount on Schedule 2 (Form 1040), line 8”, and for joint filers the instructions say “If both you and your spouse are required to file Form 5329, complete a separate form for each of you.” “Include the combined tax on Schedule 2 (Form 1040), line 8.” Schedule 2 is explained on the Schedule 2 (Form 1040) page.
Edition and line numbers
This page reads the 2025 Form 5329 and its 2025 instructions the current files irs.gov served on 2026-10-17. They are the forms 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 its lines and exceptions differently.
Common mistakes
- Leaving the exception number off line 2. The instructions say “In the space provided, enter the applicable exception number”, so an amount on line 2 needs a number beside it.
- Using 10% on every dollar of line 3. The instructions say “you must multiply that amount by 25% instead of 10%.” That applies to a SIMPLE IRA distribution received in the first 2 years of participation.
- Picking just one exception when several apply. The instructions say “If more than one exception applies, enter 99.” That 99 goes in the space on line 2.
Related: Form 5329 explained, Early withdrawal penalty exceptions, Form 8606, Form 1099-R code S, and Schedule 2 (Form 1040).
Sources
- 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.