(269) 1977 [h«® @{zss!< ]°er}uv= c5nm༡ Instructions for Form 5329 Return for Individual Retirement Savings Arrangement Caution: There is a penalty for failure to file this return by an individual who has an individual retirement account or individual retirement annuity. A seperate Form 5329 must be filed for each spouse in the case of a non-working spousal arrangement. (Section references are to the Internal Revenue Code unless otherwise specified) General Information This return provides a means for determining the aliowable deduction on Form 1040 for contributions to a retirement sav ings arrangenient (hereina!ter referred to as arrangement). Individuals who have made contributions to non-spousal arrange ments may deduct up to the smaller of 15 percent of their compensation which is includible in gross income, or $1,500. For tax years beginning in 1977, if you are married and receiving compensation (see Definition B) and your spouse is not employed, one arrangement may be established for you and one for your spouse. If arrangements are established for you and your non working spouse (spousal arrangement), you may deduct your annual contributions to such arrangements in an amount not to exceed 15 percent of your compensation up to a total of $1,750. The contributions should be equally divided be tween each arrangement. For example, an individual earning $12,000 in 1977 should contribute $875 to each arrangement to take advantage of the full $1,750 allowable deduction. If your spouse becomes employed in a year, you may no longer claim a deduction for contributions to your spouse's arrange ment for that year. However, your spouse may contribute to his or her arrangement and take a deduction for such contributions if he or she is not an active participant in a qualified plan in that year. You may continue making contributions to your arrancement and taking deductions for the contr butions. In cases where both spouses are employed during the year, the deduction for contributions to each of their arrange ments may not exceed 15 percent of each Individual SOCUSO'S compensation $1,500, whichever is smaller. or No deduction is allowed for contributions to an arrangement if the individual is age 70% or older. No deduction is allowed for contributions to arrangements for an individual and his of her non working spouse if either spouse is age 70% or older. Individuals who have indi dual retirement autore aconites are required to to return Cach your ther or not they have made contributions donn,: the year. Failure to fle Form by the due date, without reasonable cause, will result in a penalty of $1 per d for each day it is late, nut to exceed $,000. The Low also imposes a tax on (1) ex. cess contributions to an arrangement, (?) premature distributions from an arrange- This form is also to be used to notify If you have any questions about your arrangement, see Publication 590, Tax Information on Individual Retirement Sav ings Programs, or contact any Internal Revenue Service office. Definitions A. Retirement Savings Arrangement.A retirement savings arrangement means an individual retirement account, an individual retirement annuity, or an individual retirement bond(s) issued by the United States Treasury. These bonds should not be confused with United States Savings Bonds or United States Retirement Plan Bonds. Further information about individual retirement bonds may be obtained from the Department of the Treasury Circular, Public Debt Series No. 1-75, U.S. Indi vidual Retireinent Bonds. rollover C. Rollover Contribution.-A arrangement: (1) The first type of rollover contribu tion is a transfer of your entire interest m a qualified pension, profit sharms, or stock bonus plan to an arrangement. To qualify for this type of rullover contribution the transfer to the arrangement must ment the requirement of (a) below and the distribution must meet the requirement of (b) below. (a) You murd transfer the total amount of the distribution from the plan (les any amounts you contributed to the pl:n) to an arrangement (other than an endowment contracts wit:un 60 days of recent of sich distribution. If the distribution received is other than money, you must transfer exactly the property received from the plan to an arrangement. (b) The distribution from the plan must meet one of the following sets of circumstances. (1) Your employer terminates the plan and your entire interest in the plan is paid to you during one taxable year because of the termination (complete discontinuance of contributions to a profit sharing or stock bonus plan is considered a termination of a plan); or (ii) You received your entire interest in the plan in a lump-sum distribution. To have a lump-sum distribution from a plan the following three conditions must be met: (a) the distribution to you of the total amount credited to you in a quali fied pension, profit sharing, or stock bonus plan, must be received within one taxable year, (b) such distribution occurs on or after you reach age 59 or upon your termination of employment and (c) you have been a participant in the plan for five or more taxable years before the taxable year in which you receive the distribution, A distribution due to termination of employment does not apply to self-employed individuals. The amount of the distribution you roll over to an arrangement is not includible in your income. (2) The second type of rollover contribution may occur when you receive a distribution of any or all of your interest in one arrangement, and transfer the entire distri bution to another arrangement (other than an endowment contract) within 60 days of the receipt of the distribution. Such a transfer from one arrangement to another will not be a taxable distribution provided that the date on which you received the distri bution was at least 3 years after the date on which you last received such a nontaxable distribution. D. Prohibited Transactions.-Prohibited transactions are certain transactions be tween an individual or his beneficiary and his arrangement. Such transactions will cause the individual retirement account, annuity or bond to cease being an arrangement as of the first day of the taxable year in which such transaction occurs. These types of transactions include borrowing from your arrangement or indirectly using the assets or incorne of your arrangement as a basis for obtaining a benefit. E. Pledging of Account. (1) If, during the taxable year an individual uses his individual retirement account, or any portion of it as security for a loan, that part is treated as being distributed to that individual. (2) If, during the taxable year an individual uses all or any portion of his individual retirement annuity contract as security for a loan, the total value of that contract is treated as ben; disthaugst in that individual, Such distributions are taxable and are to be reported on I orm 10-10, line 20. Also, if the individual has not reached are 50% at the tinie the arrangement is ploded, Such distributions are subject to the on premature distributions-Seo specific instructions, Part V. 235-103-1 (270) Note: Any distributions received from any arrangement are to be reported as other income on Form 1040 kng 10 except: (1) Rollever contributions to another plan or arrangement. (2) Excess current year contributions returned before the due date of your in. come tax return for such year. (3) Amounts transferred to a former spouse under a divorce decree. (4) The cash valur of any individual re tirement annuity contracts distributed to you. However, any payments received under there contracts are to be reported on your income tax return as fully taxable annuity payments. General Instructions A Who Must File. (1) Any person who has an individual retirement account or individual retirement annuity whether or not any contribution was made during the year must file Form 5329. Use one Form 5329 per person per year to summarize all the retirement accounts of that person. This means that a non-working spouse must file a Form 5329 for the year in which an individual retirement account or annuity is established for him or her and for each subsequent year that his or her individual retirement account or annuity remains in existence. Note: If you have received the assets of an individual retirement arrangement or an individual retirement annuity under a divorce decree or under a written instru ment incident to a divorce decree you are required to file Form 5329 for that account or annuity. Form 5329 should be filed starting with the year in which you received the assets or annuity and for cach subsequent year that the individual retirement account or annuity remains in exist. ence. On the Form 5329 filed for the year you receive the assets be sure to complete item 3 giving the name and social security number of your former spouse. The individual who transferred his or her interest to his or her former spouse under the divorce decree or written instrument incident to a divorce decree should fe Form 5329 for the year of the transter and be sure to complete item 3 giving the former spouse's name (name used after divorce) and social security number. If you have not established a new individual retirement account or annuity subsequent to the transfer incident to the c.vorce, write "Final Return" on the top of pace 1 of Form 5329. This Form must also be filed by the sur viving spouse or other surviving beneficiary of such person as long as there is a bal ance remaining in the account. Generally a surviving spouse or beneficiary need only complete rare one of form 5329. How. ever, beneficiaries other than a surviving Spouse should see instructions for Part VI. (2) Any person who has purchased individual retirement harus and is claiming a deduction en his or her income tax re turn, Form 1049, or is liable for the tax on excess contributions or the tax on premia ture distributions with respect to such herits must 1 Form 6770. letnd Revenue Service t'ut he or she his made or has failed to make the contobution of the remanung portion of the two step payment authorized under Public Low 94-267 must file Form 5329. See Form 5329 Part II, stern 5. Parte 2 1. When and Where to File.-- File Form 532) as an attachment to your Form 1040 at the time and place for flan. Form 1040 including any extensions thereof. If you do not have to file Form 1040 because you do not have enrugh income to require ; an income to return, file only a completed Form 5379 with the Internal Revenue Service at the time and place you would have filed Form 1040. Include a check or money order payable to the Internal Revenue Service for any tax due shown on lines 12, 13 and/or 16. C. Preparer's Number.-The paid preparer's number is only required if there is a tax due on premature distributions. For further information regarding paid preparer's spning requirements see Instruc tions for Form 1040. D. Final Return.-The Form 5329 filed for the year in which you receive your final distribution of the funds from the arrangement should be marked Final Return at the top of page 1. Specific Instructions Line 2.-If you check Yes you are not eligible to take a deduction for your con. tributions to your arrangerment during the year. Participation in any such plan for any part of the year makes you incligible for such a deduction. To find out whether the plan of your employer in which you are participating is a qualified plan, ask your employer. Note: (i) A member of a reserve com. ponent of the armed forces or the national Guard is not considered to be an active participant in a government plan for a taxable year solely because he is a member of the reserve component or national guard unit, unless he has served in excess of 90 days on active duty (other than active duty for training) during the year. (ii) An individual whose participation in a government plan is based solely upon his activity as a volunteer firefighter and whose accrued benefit as of the beginning of the taxable year is not more than an annual benefit of $1,800 payable as a single life annuity when the annuitant reaches age 65, is not considered to be an active participant in the government plan for the taxable year. Line 5.-Complete line 5 only if you meet ALL the requirements listed under 5(a). Line 8.-Enter wages, tips, and other compensation as described in definition B. Do not include carnings of your spouse. Line 9(h).-You should contribute equally to your arrangement and the ar rangement of your non-werking spouse as you may only deduct twice the smaller of the two amounts contributed. Any other allocation of the contributions will result in an excess contributions tax. Line 10.-Enter all your contributions and the contributions made on your behalf with the exception of (1) any rubiover con. tributions as described in definition C or (w) to be int if . CI, *,་, include the purchase price of any individual retirement bonds purchased during the yeur which you have redeemed within twelve months of their date of purchase. For taxable years beginning in 1977, contributions will be considered to bu as de tions, scribed below, withdrawn before the due date of your 1977 income tax return (b) Any rollover contributions included in line 1 above (c) Purchase price of any individual retirement bonds included in line 1 above, redeemed within 12 months of their date of purchase ... (d) The life insurance portion of your (e) Total (add lines 4(a) through 5 Total contributions for 1977 (line 3 less line 4(e)) Generally, current year excess contribu tions whether or not withdrawn from your retirement savings arrangement before the due date of your income tax return for such year will be taxed as excess contributions. However, the following EXCEP. TIONS are applicable to taxchle years be ginning after December 31, 1976: (1) If your contributions for the year ex. ceed 15 percent of your con:pensation but do not exceed $1,500, you may withdraw the amount which exceeds 15 percent of your compensation, before the due date of your income tax return for the year and not include the armount withdrawn on line 10, Form 5329. (2) If you are claiming a deriuction under the spousal retirement swives ar rangement limitation and your contribu tions are less than $1.750 hit expel the (+) babes love. w v) contributions made on behalf of your Spouse or (1) contributions made on your behalf, you may withdraw the excess contributions before the due date of your fix return for the year and not include the withdrawn amount on line 10, Form 5320. (1) If your employer contubutes on your behalf to a quiltu o jei van. | Full Shannar or dark bewus plan, a 403(b) unninty of custodial account ne a mvernment truepient plan other than the under the Sonal Security or denisel koturnment Acts, or you are an active participant in such a plan, and the contributions you mine to your ar fangement are less than $1,500 ($1,750 if applerable), you may withdraw such con Any rerent year excess contributions. will not be subsect to The Ta on Premature Distributions if the withdrawal made befine the due date of your income 134 return and includes the income (271) earned on the excess contribution Heeever, the income earned en fie withươn excess contributions must be incluied on form 1040, line 20, for the your ni which received and 10 percent of the income is to be reported on line 13, Form 54.9 for the year if you have not reached are 594 at the time you received the distribution of the income. Part IV. Excess Contributions Tax for Retirement Savings Arrangements-Worksheet fif you owe any excess contributions tax, attach a copy of this worksheet to the Form 5329 that you file with the Internal Revenue Service) If you have contributed either this year or in prior years more to your arrangement than is or was allowable as a deduction, you may have an excess contribution subject to tax. Please complete the following worksheet. The tax figured on line 7 of the worksheet should be carried forward to Form 5329, line 12(c) and Form 1040, line 53. 5 (a) Adjusted prior year excess contributions (ine 2 less total of lines 3 and 4 but not less than zero) (b) 6% of line (a), enter here and on Form 5329, line 12(b) 6 Total excess contributions (add lines 1 (a) and 5(a)). 7 Excess contributions tax (the lesser of 6% of line 6 or 6% of the value of your arrangement on the last day of 1977). Enter tax on Form 5329. line 12(c), and Form 1040, line 53. Part V.-Tax on Premature Distributions-Worksheet I you received a distribution from your arrangement before you reached age 591⁄2 please complete the following worksheet. The tax figured on line 4 of the worksheet should be carried forward to Form 5329, line 13 and Form 1040, line 53. 1 If you entered into a prohibited transaction as described in definition D, borrowed any amount from one of your Individual retirement arrangements, or pledged any part of one of your individual retirement annuity contracts, enter 10% of the value of the account or annuity at the beginning of the year.. 2 Enter 10% of the amount of the distributions from your arrangement during the year. Do NOT include any (a) excess current year contributions returned during the year or excess contributions made in 1976 and returned to you after 12-31-76 but before the filing date for your income tax return for 1976, (b) "rollover contributions" to another retirement arrangement or plan, (c) amount distributed because of disability, (d) amount transferred to a former spouse under a divorce decree, (e) amount from an arrangement for which you made an entry on line 1, or (1) amount distributed from an arrangement because it was pledged as security for a loan. 3 Enter 10% of the amount from your individual retireinent savings accounts that you pledged as security for a loan 4 Total tax-enter the total of lines 1, 2, and 3 here and on Form 5329, line 13, and Form 1040, line 53. (See instrations be for credis arainst tax) Tax on Premature Line 1. If you encare in a prohibited deli wis tear. If you have not reached ape 59% by P 1st day of the year, report 10 percent of the distribution on line 1 unless such deemed distribution is because of a dis delity you have incurred. If you enter an amount on line 1, do not make any Line 4-How to Apply Excess Credits Excess Credits -If Form 1010, line 47 (212) Part VI.-Tax on Undistributed Individual Retirement Accounts and Annuities You must start receiving, a distribution of your individual retirement account or annuity by the last day of the year in which you reach are 70%. Such distribution may be either (a) the entire interest in your account, (b) an annuity payable during your life or the lives of you and your spouse, (c) in approximately equal payments over a period of years not greater than your life expectancy or (d) in approximately equal payments over a period of years not greater than the joint life and last survivor expectancy of you and your spouse. You may be liable for the excise tax on the undistributed funds in your individual retirement account or annuity in the year you reach are 70 and any succeeding year if: (i) you do not receive any distribution from your account or annuity during the year, or (ii) you are receiving distributions which are not being made in approximately equal payments over one of the periods of time mentioned in item (c) or (d) of the preceding paragraph. If (i) or (n) of this paragraph apply you, please complete the worksheet below. Beneficiaries, if you have not received your total interest in the arrangement or an immediate annuity purchased with your entire interest in the arrangement, within 5 years from the date of death of the individual who established the arrangement, or the death of the surviving spouse you are subject to this tax. Enter 50% of your undistributed interest in the arrangement on line 16, Form 5329. Do not complete worksheet below. Worksheet for Tax on Undistributed Individual Retirement Accounts and Annuities A. Current year distribution method: 1 Value of your account/annuityt as of the first day of this year. 2 (a) Multiple from Table I or II below, whichever is applicable (b) Number of years since the last day of the taxable year in which you became age 70. (c) Adjusted life expectancy multiple (line 2(a) less 2(b)). . 3 Minimum required distribution (divide line 1 by line 2(c) and enter the result here). 4 Amount actually distributed to you from your individual retirement account/annuity this year 5 If line 3 is greater than line 4, enter the difference here, otherwise enter zero. 6 Tax on undistributed amount (50% of line 5). Enter here and on Form 5329, line 14 B. Aggregate distribution method: 7 Total of all minimum annual amounts required to be distributed starting with the year you reached 70%1⁄2 through the end of this year (compute line A.1 through 3 for each year starting with the year you reached age 70%. Enter total of all lines A.3 computations here.) . B Total of all distributions made starting with the year you reached age 70%1⁄2 through the end of the year covered by this return. . . . . 9 If line 7 is greater than line 8, enter the difference here, otherwise enter zero. 10 Tax on undistributed amount (50% of line 9) Enter here and on Form 5329, line 15. ↑ The value of your annuity for this computation is the reserve under the contract which is obtainable from the insurance company that issued your contract. Table I One Life Expected Return Multiples To be used in all cases except when payments are over a period of time listed in (d) above Female Multiple 15.0 12.1 Table II Ordinary Joint Life and Last Survivor Annuities-Two Lives-Expected Return Multiples |