! amounts an eligible state or local governmental

CAUTION section 457 deferred compensation plan has re-

ceived in a direct transfer or rollover from a qualified retire- ment plan, described above, that distribution is consid- ered a distribution from a qualified retirement plan.

5% rate on certain early distributions from deferred annuity contracts. If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. A 5% rate applies to distributions under a written election providing a specific schedule for the distribution of your interest in the contract if, as of March 1, 1986, you had begun receiving payments under the election. On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. Attach an explanation to your return.

Distributions from designated Roth accounts alloca- ble to in-plan Roth rollovers within the 5-year period. If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from your 401(k), 403(b), or 457(b) plan to a designated Roth account, you take a distribution from the designated Roth account, you may have to pay the additional 10% tax on early distributions. You must generally pay the 10% additional tax on any amount attributable to the part of the in-plan Roth rollover that you had to include in income (recapture amount). A separate 5-year period applies to each in-plan Roth rollover. See Figuring your recapture amount, later, to determine the recapture amount, if any.

The 5-year period used for determining whether the 10% early distribution tax applies to a distribution allocable to an in-plan Roth rollover is separately determined for each in-plan Roth rollover, and isn’t necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution.

Figuring your recapture amount. For any early distribution in 2025 from your designated Roth account that is allocable to an in-plan Roth rollover, you allocate the amount from box 10 of your 2025 Form 1099-R to the amounts, if any, you have rolled over into that designated Roth account.

If you haven’t taken a distribution from your designated Roth account before 2025, then allocate the amount in box 10 of your 2025 Form 1099-R to the amounts you reported on the lines listed in the Recapture Allocation Chart (filling in the Taxable column first, and then the Nontaxable column for each year) until you have covered the entire amount in box 10.

If you have taken a distribution from your designated Roth account prior to 2025, then allocate the amount in box 10 of your 2025 Form 1099-R to the amounts you reported on the lines listed in the Recapture Allocation Chart (filling in the Taxable column first, and then the Nontaxable column for each year). However, don’t start at the beginning; instead, begin with the first line that hasn’t been used fully for a previous distribution.

Your recapture amount is the sum of the amounts you allocated for 2011 through 2025 under the Taxable column in the Recapture Allocation Chart. You will also include this amount on Form 5329, line 1.

Example. You had an in-plan Roth rollover in 2025 of $50,000. This is your first in-plan Roth rollover. Your 2025 Form 1040 or 1040-SR includes $30,000 on line 5b, the taxable portion of the in-plan Roth rollover, and $50,000 on line 5a, the in-plan Roth rollover including $20,000 of basis.

In December 2025, at age 57, you took a distribution of $35,000 from your designated Roth account. The 2025 Form 1099-R shows the distribution of $35,000 reported in box 1, the taxable portion of the distribution of $3,500 reported in box 2a, and the amount of $31,500 allocable to the in-plan Roth rollover reported in box 10. Because you had no in-plan Roth rollovers in prior years, you would allocate the $31,500 reported in box 10 of Form 1099-R as shown in the Example Recapture Allocation Chart.

26 Publication 575 (2025)