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Taxpayer’s Guide to IRS Form 5498

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    The trustees or administrators of Independent Retirement Accounts (IRAs) must file Form 5498 every year to report the contributions plan holders have made to their IRAs during the tax year. They should submit one copy of this form to the Internal Revenue Service (IRS) and provide an additional copy to the owner of the IRA.  This guide explains when you need to complete Form 5498 and outlines the information that needs to be included on it.
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    What Is Form 5498?

    Form 5498 allows the administrators or trustees of IRAs to report contributions to the IRS. Taxpayers who have contributed to an IRA during the year will also receive a copy of this form, but they don’t need to include it when they file their tax returns. Taxpayers typically rely on their records to report IRA contributions on their tax returns, as these forms are generally not issued until after the annual deadline to submit individual tax returns.
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    When to File Form 5498

    Plan administrators should use Form 5498 to report contributions to traditional, ROTH, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. They don’t have to file this form, however, if the plan holder didn’t make any contributions or take any distributions during the year. Here are the basic guidelines for when you need to use this form:

    You Should File Form 5498 for Each IRA Holder

    You should file Form 5498 for each person who has an IRA in your custody. You don’t need a separate form for each asset in their IRA – for instance, if someone has three certificates of deposit in their IRA, you still should only file one Form 5498. You only need to file multiple forms if a single person has multiple IRA accounts.

    You Must Report Recharacterizations

    A recharacterization is when an account holder transfers a contribution from one IRA to another type of IRA. The custodian of the first IRA must file Form 5498 to report the original contribution, and then they can use a 1099-R to report the distribution. The custodian of the second IRA, in turn, should report the recharacterized amount as a contribution on the Form 5498 that they generate.

    You Don’t Have to Report Trustee-to-Trustee Transfers

    Transfers made between IRA accounts typically don’t have to be reported on Form 5498. This includes transfers made between the following accounts:
    Any rollovers to a closed or revoked account must be reported on Form 5498, regardless of whether the IRAs fall into the above categories.

    You Often Need to File 2 Form 5498s With Inherited IRAs

    You need to file Form 5498 on behalf of the account holder if they die during the year. You should also file the form for every non-spouse beneficiary.
    Plan custodians must distribute Form 5498 by May 31st of the year following the year the contributions were made, but for tax year 2021, the IRS has extended the deadline to the end of June. This allows the custodian to include any contributions made during the beginning of the tax year that were included on the previous year’s tax return.
    Irs Form 2848

    Information to Include on Form 5498

    Form 5498 looks similar to Form W-2, which employers use to report their employees’ earnings. It has a variety of fields for different types of information. The top of the form requires information on the IRA account number, the trustee, and the plan participant. The fields on the bottom of the form seek details on the contributions made during the year. Here is an overview of what to include in each box of Form 5498:

    Box 1

    This should include all traditional IRA contributions made during the tax year and up to April 15th of the current year. Note that the deadline moves to the next business day if the 15th falls on a weekend or holiday.

    Box 2

    This box shows direct rollovers to traditional IRAs or Roth IRAs as well as qualified rollovers to Roth IRAs. It does not include rollovers from traditional IRAs to SEP, SIMPLE, or Roth IRAs.

    Box 3

    This space should include the rollovers from traditional, SEP, and SIMPLE IRAs to Roth IRAS. These IRAs are taxed differently, and you can use Form 8606 to calculate the taxable amount.

    Box 4

    This box shows amounts that were recharacterized during a transfer. It may include transfers from a range of different types of IRAs.

    Box 5

    Put the fair market value (FMV) of the IRA at the end of the year into this box. You can use the FMV on the day of death if filling out the form for a decedent.

    Box 6

    This box includes amounts related to the cost of life insurance. The amount here needs to be subtracted from the amount in box one to calculate the taxpayer’s IRA deduction.

    Boxes seven through 10 show the type of IRA and the contributions made to each type, and box 11 indicates if the account holder needs to make a minimum distribution during the following year.

    Taxpayers should keep Form 5498 for their records, and they should contact their plan administrators if they see any mistakes. Plan administrators should ensure they understand how and when to use this form, and they should consider reaching out to a tax expert if they have questions.

    Working With An Expert

    Contact the Silver Tax Group for Help on Form 5498

    Navigating Form 5498 and other requirements of the complex IRS tax code can be confusing, exhausting, and expensive. The team at the Silver Tax Group is here to help.  Our skilled tax attorneys can answer your questions, help you deal with a wide range of tax issues, and resolve disputes with the IRS. We work with individuals, businesses, and other entities – contact us today to see how we can meet your needs.

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