Form 5498: Everything You Need to Know
Form 5498 is a document that people receive from a financial institution, or their IRA's "custodian," when they have either a tax-preferred savings account IRA.4 min read
Form 5498 is a document that people receive from a financial institution, or their IRA's "custodian," when they have either a tax-preferred savings account or an IRA. This form details the amount you contributed to an IRA during the year. The IRS also gets a copy of this form. You generally will not get a Form 5498 if you made no contributions to your IRA for the year.
Form 5498 details the total amount of your yearly contributions to an IRA account. It also lists the type of retirement account you have, which may be:
- SEP IRA
- SIMPLE IRA
Form 5498 also includes amounts that you may have rolled over or transferred from other kind of retirement accounts into this IRA.
Your IRA contributions are reported to the IRS on the IRA Contributions Information form. You aren't required to file this form; this is done by your IRA issuer or IRA trustee. The deadline for filing is May 31.
Whichever institution is responsible for managing your IRA is required to report all the contributions you make to the IRA in that tax year. The type of IRA you have determines if you need Form 5498 to report your contribution information on your tax return.
There are several reporting boxes on Form 5498 that show the different types of contributions you can make to an IRA. These boxes include:
- 1 – Shows how much you contributed to a traditional IRA
- 7 – If you're not sure which type of IRA you have, an account administrator can report if it's a Roth, SIMPLE, traditional, or SEP (Simplified Employee Pension) here
- 9 – Reports contributions to a SIMPLE IRA (Savings Incentive Match Plan for Employees)
- 10 – Details your contributions to a Roth IRA
If you claim any deductions for IRA contributions, include those amounts on Form 5498. Reporting applies for IRA types including:
- Deemed IRAs
Form 5498 includes information about the trustee such as:
- Trustee name
- Federal identification number
When Edward Jones acts as an IRA custodian, the company is required by the IRS to report the following received in traditional, SEP, Roth, or SIMPLE IRAs:
Withdrawals and Distributions
The fair-market value of your investments in your IRA account is outlined in Form 5498. If you don't have a Roth IRA, the IRS will require that you start withdrawing money from this account on the calendar year that you turn 70 ½-years-old. Your Form 5498 must report amounts of any of your required distributions or withdrawals. If you don't withdraw a sufficient amount of money from the IRA, you'll be penalized by the IRS with a 50 percent tax on the distribution amount. The RMD, or required minimum distribution, increases as you grow older. The RMD is the percentage of all funds that you're required to withdraw from the account. RMDs for the current year are based on the account's fair-market value as of December 31 of the previous year.
How to Increase IRA Deductions
Plan custodians have until May 31 to send Form 5498 to the IRS and participants. This deadline is six weeks after the tax filing deadline of April 15. This May 31 deadline lets you continue to make contributions to an IRA until April 15; they will apply to the prior tax year. This additional time has the potential to increase your tax deduction.
Similar Forms to Form 5498
Form 5498-SA is for HSAs, or health savings accounts. This type of form reports your yearly contributions to tax-free accounts that are used to cover medical expenses. If you contribute to similar accounts such as a Medicare Advantage MSA or Archer Medical Savings Account, you'll also need Form 5498-SA. This has to be sent to participants and the IRS by a deadline of May 31.
Types of Contribution Information
Various types of information are reported on Form 5498, including:
- Contributions that participants make to IRAs, ESAs, and HSAs
- Whether or not the account holder is required to start taking minimum distributions
- The fair-market value of your IRA or other accounts as of December 31
- Contributions that were made to the IRAs for the tax year on that form
All contributions to the IRA for the year, including various types of IRAs, are then added together and the total is reported in box 1.
The Three Types of Forms 5498
Forms 5498 come in three different forms. The type of form depends on what's being reported. These include:
- Form 5498 includes IRA Contribution Information that reports information relating to individual accounts like traditional IRAs, SEP IRAs, Roth IRAs, and SIMPLE IRAs.
- Form 5498-SA covers information related to HSAs, or health savings accounts.
- Form 5498-ESA details information about Coverdell Education Savings Accounts.
When Should You Expect to Receive Form 5498?
IRA account holders who are required to take minimum distributions can expect to receive Form 5498 sometime after January 31, as this is the deadline to send out forms. You'll check box 11 if you will reach 70 ½ years of age during the current year. Box 11 is a reminder that you have to start taking RMDs by the deadline of April 1 of the year following the one in which you reach 70 ½ years of age. However, if you're not yet required to begin taking RMDs, your institution has a May 31 deadline to send the form.
Why Didn't I Receive Form 5498?
Expect to receive Form 5498 only if one or more of the listed activities occurred in your retirement account during the tax year:
- A contribution was made to an IRA such as traditional, Roth, SEP, or SIMPLE
- A recharacterization
- A rollover
- A conversion
- The client passed away. In this case, Form 5498 is sent to the beneficiary.
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