Form 5329 College Station Texas 2024-2025

Form 5329 College Station Texas: What You Should Know

The total amount of distributions received is dependent upon the current market value of the account at the end of the tax year. A 529 plan administrator will send a separate 1099-Q, Form 1098-R, to the custodians listed in the 529 plan agreement. Qualified distributions may be made as taxable or tax-exempt distributions. Qualified withdrawals from a 529 plan are only permitted in excess of the excess distribution limitation, and are subject to the penalty or the tax-free rollover rules. How to Make a 1098-R to Report the Withdrawals: The 1099-R must indicate whether the distribution is taxable or tax-exempt, depending on the amount rolled over. It must also indicate which type of account the distribution was made from and why it was made. Report Only the Amount Rolled Over — Do Not File the Filing Status, Type of Account, or Amount Rolled Over as a Penalty or a Tax-Free Rollover Under the 2025 rules, it is illegal for any rollover to be made in tax-exempt accounts (like 529 plans) but not as a penalty. Instead, a distribution will be treated as taxable. If the distributions are reported on Schedule SE or a Form 1099-INT, do not include them under the amount rolled over. Instead, you must file the Form 1098-R to report the total amounts reported. However, the amount rolled over can be used to satisfy the minimum distribution requirement. For information on the minimum distribution and exceptions, see Minimum Distributions under IRM 21.6.2.5.5.2, Minimum Distributions. What to Consider in Making a Qualified Distribution The principal purpose of determining qualification, or how much of a rollover will be considered a taxable contribution, is to determine which account to roll over the amount of distributions from. For examples, see examples below: If the plan uses a single-name trustee, the distribution is not considered a rollover. If the plan uses a separate trustee name and separate assets, the distribution is not considered a rollover, but the administrator must report it. The distribution to the trustee is the same as rolling the distribution into the separate account, in which there is a trust account. However, if the plan uses a separate trustee name and assets and separate trust account, the distribution is considered a rollover and treated under the provisions of IRC Section 72(i) as a contribution.

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