As the tax filing deadline approaches, people have questions about the forms and filing requirements related to their IRAs. Form 5498 is a tax document that reports contributions and other IRA-related information to the IRS. Form 5498 is generated for any individual who has completed any of the money movement-related activities listed below, such as contributions or IRA conversions. It is generated after the tax deadline and is not necessary for tax filing purposes. The form is used by the IRS for required minimum distribution (RMD) calculations based on the value of the account from the prior year. Check out the rest of the article below for some basic questions related to form 5498.
What is IRS Form 5498?
Form 5498 is the tax form used to report certain activities in IRA accounts, including Roth or Traditional IRAs and Simplified Employee Pension (SEP) IRAs. Health Savings Accounts (HSAs) are reported on a separate form.
Form 5498 reports any of the follow actions to the IRS:
- Conversion or recharacterization of accounts
- Required minimum distributions (RMDs)
Your IRA company – in this case, Midland – files the form with the IRS for you, usually by May 31st.
Who receives Form 5498?
Any individual who has completed any of the actions listed above will receive a 5498. If you did not complete a contribution, rollover, conversion, or any other action listed above, you will not receive a Form 5498. If you have multiple accounts, you will receive one for each account. In the case of an inherited IRA, a 5498 will be generated for both the deceased and the beneficiary. If you have an account with Midland, it will be uploaded in your online portal. Preliminary 5498s may be uploaded before the deadline of May 31st. Please remember these are not the final forms because contributions can still be made until the tax deadline of April 15th. Although you do not file Form 5498, it is still good practice to keep a copy for your records, in the case of any errors. You can also use it to cross-reference your personal files if you’d like to confirm.
Do you need Form 5498 to file taxes?
No, you do not need Form 5498 to file taxes. Midland does not send 5498s to the IRS until the end of May because you can continue to make contributions for both Traditional and Roth IRAs until April 15th. For tax purposes, all that you need to report is your rollovers and contributions. These can be found on an annual statement.
Can Form 5498 be corrected?
In the case of any misreporting or incorrect coding on the form, the 5498 can be correct for the current tax year. No corrections can be made for any previous tax years, and a correct 5498 will not automatically be sent to the IRS after the corrections are made. To discuss any perceived errors on the form, please contact us at (239) 333-1032 for assistance.
What about Required Minimum Distributions (RMDs)?
Once you reach the age of 72 – or 70 ½ if you reached this age prior to January 1, 2020 – you must take an RMD. It is based on your age and the account’s fair market value from December 31st of the prior tax year. This is why it is important to submit your fair market values to Midland each year so your RMDs can be properly calculated. Form 5498 will report the amount that needs to be taken.
For more information on IRA accounts and the opportunities available at Midland Trust, be sure to visit our website or call us at (239) 333-1032.