If you contribute to an Individual Retirement Account (IRA), you may receive IRS Form 5498 from your IRA custodian. This form contains important information about your IRA contributions, rollovers, and other transactions. While you don’t need to file Form 5498 with your tax return, understanding its contents is essential for accurate tax reporting and retirement planning.
What is IRS Form 5498?
IRS Form 5498, titled IRA Contribution Information, is an informational tax document that IRA custodians send to both the IRS and account holders. It reports contributions made to different types of IRAs, including:
- Traditional IRAs
- Roth IRAs
- Savings Incentive Match Plan for Employees (SIMPLE) IRAs
The form also records rollovers, recharacterisations, and fair market values of IRA accounts.
Who files Form 5498?
Your IRA custodian, not you, is responsible for filing Form 5498 with the IRS and providing you with a copy, usually by May 31 of the following tax year. Since contributions for a given tax year can be made until the tax filing deadline (typically April 15), custodians wait to issue the form to account for any late contributions.
How to read and understand Form 5498
Form 5498 contains several key boxes that detail different types of IRA transactions. Here’s a breakdown of what each section means:
- Box 1 – Reports contributions made to a Traditional IRA. These contributions may be tax-deductible.
- Box 2 – Shows rollovers, which involve moving funds from one IRA or retirement plan into another IRA.
- Box 3 – Reports Roth IRA conversions, which involve transferring funds from a Traditional IRA to a Roth IRA.
- Box 4 – Indicates any recharacterised contributions, where funds were moved between different IRA types.
- Box 7 – Identifies the type of IRA account (Traditional, Roth, SEP, SIMPLE).
- Box 8 – Reports SEP IRA contributions.
- Box 9 – Lists SIMPLE IRA contributions.
- Box 10 – Reports Roth IRA contributions.
How to report IRA contributions on your tax return
While you don’t file Form 5498 with your tax return, the information on the form can help you correctly report IRA contributions.
Traditional IRA contributions
If you made Traditional IRA contributions, you may be eligible for a tax deduction.
Your eligibility depends on whether you or your spouse is covered by a workplace retirement plan.
If you qualify, you report your deductible contributions on Form 1040, Schedule 1.
Roth IRA contributions
Roth IRA contributions are not tax-deductible, so they don’t affect your current tax return.
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However, you should retain Form 5498 as proof of contributions since Roth IRA earnings can be withdrawn tax-free in retirement.
Rollovers and transfers
Rollovers (Box 2) are tax-free if done within 60 days.
Conversions from a Traditional IRA to a Roth IRA (Box 3) are taxable in the year they occur.
Direct trustee-to-trustee transfers (between similar IRAs) are not reported on Form 5498.
Where to apply Form 5498 information
Form 5498 is for record-keeping purposes and does not need to be attached to your tax return. However, you should use it to:
- Verify your IRA contributions and ensure accurate tax reporting.
- Keep track of rollovers and conversions for tax planning.
- Monitor your Required Minimum Distributions (RMDs) if you are 72 or older, as custodians report IRA balances to calculate your RMD.
IRA contribution deadlines and limits
Deadline: Contributions for a tax year can be made until the April filing deadline of the following year.
Contribution Limits (for 2024):
- Traditional and Roth IRAs: $7,000 ($8,000 if age 50 or older).
- SEP IRAs: The lesser of 25% of compensation or $69,000.
- SIMPLE IRAs: $16,000 ($19,500 if age 50 or older).
