U.S. · Form 5329 line 2
Form 5329 line 2 early distribution exceptions.
Pick an exception number to see what it covers, plus how lines 1 to 4 fit together.
Line 2 is the part of the early distributions on line 1 that is not subject to the additional tax. Enter the amount you can exclude and, in the space provided, the exception number from the instructions, 01 to 23. If more than one exception applies, enter 99. Line 3 is line 1 minus line 2, and line 4 is 10% of line 3, which goes on Schedule 2 (Form 1040), line 8.
Look up an exception number
Result
Exception numbers for line 2
| Exception number | What it covers (2025 instructions, summarized) |
|---|---|
| 01 | Qualified retirement plan distributions (not IRAs) after separation from service in or after the year you reach 55 (50 for qualified public safety employees and private sector firefighters), or after 25 years of service under the plan, whichever is earlier. |
| 02 | Substantially equal periodic payments, at least annually, for your life (or life expectancy) or the joint lives of you and your designated beneficiary; from an employer plan, payments must begin after separation from service. |
| 03 | Distributions due to total and permanent disability. |
| 04 | Distributions due to death (not modified endowment contracts). |
| 05 | Qualified retirement plan distributions up to unreimbursed medical expenses paid during the year minus 7.5% of AGI. |
| 06 | Qualified retirement plan distributions (not IRAs) to an alternate payee under a qualified domestic relations order. |
| 07 | IRA distributions to certain unemployed individuals for health insurance premiums. |
| 08 | IRA distributions for qualified higher education expenses. |
| 09 | IRA distributions for the purchase of a first home, up to $10,000. |
| 10 | Qualified retirement plan distributions made because of an IRS levy. |
| 11 | Qualified distributions to reservists serving on active duty for at least 180 days. |
| 12 | Distributions incorrectly indicated as early by code 1, J or S in box 7 of Form 1099-R; include the amount you received when you were 59½ or older. |
| 13 | Section 457 plan distributions that are not from a rollover from a qualified retirement plan. |
| 14 | Employer plan distributions where you separated from service by March 1, 1986, your entire interest was in pay status under a written election on that date, and the distribution is being made under that election. |
| 15 | Dividends paid on stock described in section 404(k). |
| 16 | Annuity contract distributions to the extent allocable to the investment in the contract before August 14, 1982. |
| 17 | Phased retirement annuity payments made to federal employees. |
| 18 | Permissible withdrawals under section 414(w) from eligible automatic contribution arrangements. |
| 19 | Qualified birth or adoption distributions: up to $5,000 within the one-year period beginning on the date the child was born or adopted; attach a statement with the child's name, age and TIN. |
| 20 | Distributions on or after the date a physician certifies a terminal illness or condition reasonably expected to result in death in 84 months or less (Notice 2024-02). |
| 21 | Corrective distributions of excess IRA contributions and their earnings made on or before the due date of the return, including extensions. |
| 22 | Qualified distributions to victims of domestic abuse, within the one-year period beginning on any date the individual is a victim of abuse by a spouse or domestic partner (Notice 2024-55). |
| 23 | Eligible emergency expense distributions for unforeseeable or immediate personal or family emergency needs (Notice 2024-55). |
| 99 | Enter 99 if more than one exception applies. |
Why it matters
You generally must file Form 5329 to report an exception to the 10% additional tax, unless distribution code 1 is correctly shown in box 7 of every Form 1099-R and you owe the tax on the full amount, in which case you can report it directly on Schedule 2 (Form 1040), line 8. File the form when box 7 does not show the exception or it does not apply to the whole distribution. The line 4 caution says that if part of line 3 was from a SIMPLE IRA, you may have to include 25% of that amount instead of 10%.
Worked example
A $20,000 IRA distribution before age 59½, of which $8,000 paid qualified higher education expenses (exception 08): line 1 is $20,000, line 2 is $8,000 with 08 beside it, line 3 is $12,000 and line 4 is $1,200. These figures are illustrative; the rest of the amount is still taxable income on your return.
What this page does not do
The table paraphrases the instructions in brief and omits their conditions and cross-references, so read the full text of the exception before relying on it. It does not decide whether an exception applies to you.
Sources
- Instructions for Form 5329 (2025): The exceptions list for line 2 and the Who Must File rules. Read November 2, 2026.
- Form 5329 (2025): The exact wording of lines 1 to 4. Read November 2, 2026.
These are the tax year 2025 edition instructions and forms (published for returns filed in 2026). The IRS revises them each year, so thresholds, line numbers and limits can change; check the current edition before relying on a figure.
Frequently asked questions
What goes on Form 5329 line 2?
Early distributions included on line 1 that are not subject to the additional tax, along with the applicable exception number.
What are the exception numbers?
The instructions list 01 through 23, for example 03 for disability, 08 for higher education expenses and 09 for a first home up to $10,000.
What do I enter if more than one exception applies?
Enter 99 on line 2.
Do I have to file Form 5329 for an early distribution?
Not if distribution code 1 is correctly shown in box 7 of all your Forms 1099-R and you owe the 10% tax on the full amount; then you report it directly on Schedule 2 (Form 1040), line 8.
How is the tax on line 4 figured?
Line 3 is line 1 minus line 2, and line 4 is 10% of line 3. If part of line 3 was from a SIMPLE IRA, you may have to include 25% of that amount instead.
Not tax or legal advice
This page summarizes IRS instructions and is not tax, legal or financial advice. A CPA, enrolled agent or the IRS can confirm what applies to your situation. Everything runs in your browser; nothing you enter is sent anywhere.