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Form 5498: It's All About IRA Contributions

By Selena Maranjian - Sep 22, 2015 at 10:00PM

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Understanding the role of Form 5498 can help you with your tax preparation, can help keep your returns accurate, and when the time comes, it can help you take the correct required minimum distributions.


Tax forms can be confusing and a hassle, but you don't even have to file a 5498 form.

Yes, IRS Form 5498 is one more form for you to deal with, but it doesn't make your tax life much more complicated. It's a benign, and even helpful, form.

What's so great about it? Well, you don't have to do much with it, other than keep it for your records and perhaps refer to it on occasion. It's a form that's filed with the IRS by the organizations that manage your IRAs, such as your brokerage or bank -- they file it, and you don't. Form 5498 reports your IRA contributions to the IRS.

If you have one or more IRAs, there's a good chance you've received lots of 5498 forms over the years, without even realizing it. The forms will often arrive well after other forms, such as 1099s, arrive, because the entities issuing them have until May 31 to do so. That's due to the late deadline for IRA contributions that permits contributions for the current tax year to be made until the tax-filing deadline (usually April 15) of the following year. Form 5498 will arrive earlier, by February, if it's reporting on required minimum distributions. More on that soon.

There's also a Form 5498-SA that will be sent to you (and the IRS) if you have a health savings account (HSA), a tax-advantaged account used to pay for qualified medical expenses, or a similar account, such as an Archer Medical Savings Account or a Medicare Advantage MSA. The form will summarize contributions made to your account.

Your IRA managers file Form 5498 with the IRS, reporting on your IRA contributions.

Little boxes
Form 5498 is a bit more complicated than it may seem, because there is more than one kind of IRA. In box 1 of the form, you should see your contribution for the tax year in question to a traditional IRA, while box 10 will reflect your contribution to a Roth IRA. If you have a SIMPLE IRA, perhaps because you're self-employed, your contribution will appear in box 9, and a Simplified Employee Pension (SEP) IRA has its contributions listed in box 8. If box 7 is used, it will reflect the kind of IRA that the form is reporting on, such as a traditional IRA or a SEP IRA.

Any rollovers or conversions you executed from a retirement plan (such as a 401(k) held at a now-former employer) into an IRA should appear in box 2 or box 3. Direct trustee-to-trustee transfers from one IRA to another don't appear on Form 5498.

The point of it all
So what is Form 5498 for? Is it just there as a convenience for you? Not quite. It's a check in the system, helping the IRS (and you) ensure that the contributions you claimed on your return match what the IRA managers say that they received. If the IRS spots discrepancies, you can face penalties or interest payments, plus having to pay any taxes still due. 

RMDs
Another purpose of Form 5498 is to help with required minimum distributions that those aged 70 1/2 and older and those who inherited IRAs often must take from IRAs. RMDs are features of traditional IRAs, SEP IRAs, SIMPLE IRAs, and SARSEPs. Roth IRAs don't have RMDs while their owners are alive, but after that, they do. 401(k)s, 403(b)s, and 457(b) plans – even the Roth variety of them – do sport RMDs.

Form 5498 includes some useful RMD information for those who will need it. Box 11 indicates whether an RMD is required to be taken in the year that you receive the form. (That's because the form arrives after the tax year in question has concluded.) Box 12b will show the value of the RMD based on the fair market value of the account in question at the end of the tax year in question. As an example, for tax year 2015, you will receive Form 5498 in early 2016, and it will reflect the account's value at the end of 2015 and the amount of any RMD that must be taken by the end of 2016 (unless it's your first year of taking RMDs, in which case you have a few more months).

Understanding the role of Form 5498 can help you with your tax preparation, can help keep your returns accurate, and when the time comes, it can help you take the correct RMDs.

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