Date: February 8th 2007

This is from a Lacerte user:

I discovered an error in the Lacerte program regarding the computation of the form 5329 10% Penalty on a early distribution of an IRA. No penalty was computed.

I have talked with Lacerte and they confirm the error when there is only a partial conversion to a Roth of an early IRA distribution (subject to penalty). The Lacerte tech who called me said he checked prior years' software and found the error has been there for several years. Lacerte plans to correct the error with future versions of the 2006 program.

While waiting for the Lacerte fix, if you have an early IRA distribution with only a partial conversion to a Roth be sure to check the penalty computation. An entry on input page 41 (Retirement Plan Taxes), code 31 ("Early distributions included in income [O]" - O is for Override), will force the form 5329 with the penalty to be correctly computed on the amount entered in code 31.


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