Yes! You can use AI to fill out Individual Retirement Account (IRA) Distribution Request Form

The form explicitly states it is not for required minimum distributions (RMDs), trustee-to-trustee transfers, or recharacterizations. People often overlook this disclaimer and attempt to use the form for these purposes, especially for a simple IRA-to-IRA transfer. This results in an immediate rejection of the form, delaying the transaction and requiring the user to start over with the correct paperwork from the receiving institution. Always read the form's header and purpose statement carefully before filling it out.

Choosing the wrong reason, such as selecting 'Normal Distribution' when under age 59½, can have significant tax consequences, including a 10% early withdrawal penalty. This often happens due to a misunderstanding of IRS rules for different distribution types like 'Substantially equal periodic payments' or 'Permanent disability'. Incorrect selection leads to improper tax withholding and reporting on Form 1099-R, potentially triggering an IRS inquiry. It is crucial to verify your eligibility for the selected reason before submitting.

In Section B, users must certify that their Roth IRA has met the 5-year holding period to be considered a 'Qualified Distribution'. Many people are unaware of this rule or calculate the period incorrectly, leading them to mistakenly claim a tax-free distribution when it is actually non-qualified and potentially taxable. This error can result in an unexpected tax bill and penalties. Before checking 'Yes', confirm the date your first contribution was made to any Roth IRA.

A very common error is using the 'Direct Rollover' section to move funds to another IRA. The form clearly states this section is only for rollovers to an employer plan like a 401(k) or 403(b), not another IRA. This mistake happens because the term 'rollover' is used broadly, but the process is different. Using this section for an IRA-to-IRA move will cause the request to be rejected, as such transfers must be initiated by the receiving custodian.

When requesting a partial distribution, users often fail to specify which funds to redeem from, or the percentages/dollar amounts they list do not add up to the total requested amount. For example, listing percentages that total 90% or 110% instead of exactly 100%. This ambiguity forces the processor to either reject the form or make a proportional distribution by default, which may not align with the user's investment strategy. Double-check all figures to ensure they are complete and accurate.

The form may require a Medallion Signature Guarantee for certain transactions, which is a special stamp that guarantees the signature is authentic and the signer has the legal authority to act. People frequently confuse this with a more common notary public stamp, which is not an acceptable substitute. Submitting a notarized form when a Medallion Guarantee is required will lead to an automatic rejection and delay the distribution. This guarantee can only be obtained from specific financial institutions participating in a medallion program.

State tax withholding rules are complex and vary; some states mandate withholding while others make it voluntary. A common mistake is electing 'NOT TO' have state tax withheld when residing in a state with mandatory withholding. This will cause the form to be rejected as 'not in good order'. To avoid this, you should understand your state's specific rules or consult a tax advisor before making an election.

Several distribution reasons, such as 'Death/Beneficiary liquidation', 'Transfer incident due to divorce', or sending funds to a new bank account, require additional documentation. Users often forget to include the death certificate, certified divorce decree, or a voided check/bank statement as instructed. This omission halts the processing of the request until all required documents are received in good order, causing significant delays. AI-powered form fillers like Instafill.ai can help by flagging fields that trigger a need for extra documentation.

Removing an excess contribution is a complex process with strict IRS deadlines. Common mistakes include entering the wrong tax year for which the excess was made, misidentifying the date of deposit, or choosing the wrong correction method (before vs. after the tax-filing deadline). These errors can result in failure to properly correct the excess, leading to a recurring 6% IRS penalty tax for each year the excess remains in the account. Given the complexity, consulting a tax advisor is highly recommended.

This form is often available as a flat, non-fillable PDF, forcing users to print and fill it out by hand. This can lead to illegible entries for critical data like account numbers, Social Security Numbers, or distribution amounts, causing processing errors or rejections. To prevent this, it's best to use a tool like Instafill.ai that can convert non-fillable PDFs into smart, fillable forms, ensuring all data is clear, correctly formatted, and validated before submission.