Form 5329 walkthrough: line-by-line

When you need Form 5329

File Form 5329 with your Form 1040 if either: (1) the corrective deadline passed and excess remains in the account, or (2) you carried forward an excess from a prior year and want to absorb it in this year's underage. The 6% applies each year the excess remains uncorrected (statutory phrase: "determined as of the close of the taxable year"), capped at 6% of the account value:

“In the case of [accounts/annuities listed], there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual's accounts or annuities (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account or annuity (determined as of the close of the taxable year).”— 26 U.S.C. §4973(a) (read full statute)

Source: IRS Instructions for Form 5329 (current). Verified verbatim against the 2025 Form 5329 PDF on 2026-05-04.

Part III — Excess Contributions to Traditional IRAs (lines 9–17)

Verbatim from the 2025 Form 5329:

Part IV — Excess Contributions to Roth IRAs (lines 18–25)

Verbatim from the 2025 Form 5329:

Worked example — Roth excess corrected timely (Part IV, year of contribution)

Suppose you over-contributed $400 to your Roth IRA in 2025 and removed it on February 15, 2026 (before the April 15 deadline) along with $75 of NIA per the §1.408-11(a)(1) formula. Because the excess was timely corrected:

• Form 5329 Part IV is NOT requiredfor the corrected $400. The corrective distribution removes it from being an “excess contribution” for §4973 purposes.
• The $75 of NIA is taxable in 2025(the year of the contribution) per IRC §408(d)(4) — it appears on the 2025 Form 1040 as “Other income,” routed via the Form 1099-R the custodian issues in January 2026 with distribution code P (return of contribution made in prior year).
• If you were under 59½, the corrective NIA is exempt from the 10% early-distribution penalty under SECURE 2.0 (Pub 590-A: “Beginning on or after December 29, 2022, the 10% additional tax will not apply to your withdrawal of interest or other income, if withdrawn on or before the due date (including extensions) of the income tax return.”).

Worked example — Roth excess NOT timely corrected (Part IV, year-end excise)

Same $400 over-contribution to your 2025 Roth IRA, but you discovered it after October 15, 2026. Now Part IV applies:

• Line 18: $0 (no carryover from 2024 in this hypothetical).
• Line 19: 2025 Roth contribution shortfall available to absorb the excess (e.g., $0 if you maxed out).
• Line 20: $0 (no Roth distributions taken in 2025).
• Line 21: $0 (sum of 19 + 20).
• Line 22: $0 (line 18 − line 21).
• Line 23:$400 (the 2025 over-contribution that wasn't timely removed).
• Line 24: $400 (sum of 22 + 23).
• Line 25: $24 — 6% of $400 (assuming Roth IRA Dec 31 value ≥ $400). Carries to Schedule 2 line 8 of your 2025 Form 1040.
• File Form 5329 Part IV again for 2026 with $400 on line 18 (carryover from line 24). The 6% applies again until the $400 is absorbed by an under-contribution year or withdrawn (without NIA, since the timely window has closed).

Part VII — Excess Contributions to HSAs (lines 42–49)

Verbatim from the 2025 Form 5329:

Common errors

• Forgetting that the 6% applies per year the excess remains — multi-year excess requires a 5329 for each open year.
• Entering NIA (earnings) on Form 5329 — earnings are reported on Form 1040 / 1099-R, not 5329.
• Filing Form 5329 standalone after the original return was filed without it (it can be filed standalone if you forgot it on the original return).
• Ignoring the Dec-31-account-value cap. The 6% applies to the smaller of the excess or the account's year-end value — relief in extreme loss years.

Also relevant

• Form 8606 walkthrough — required when the prior-year excess was nondeductible or basis is involved.
• What counts as excess — the definitional layer that determines whether 5329 even applies.
• Prior-year vs current-year excess — which return year carries the 5329 and which carries the 1099-R.
• Run the NIA calculator — the earnings figure to keep separate from the 5329 excise math.
• Removal decision tree — confirm whether 5329 is the right path or you can still remove timely.

Informational, not tax advice. Consult a CPA or Enrolled Agent before acting on a corrective distribution.