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Form 5498

Form 5498 is an IRS form titled “IRA Contribution Information.” It’s a tax form used by financial institutions to report contributions to an individual’s Individual Retirement Arrangement (IRA), including Traditional IRAs, Roth IRAs, SIMPLE IRAs, and SEP IRAs, as well as account rollovers and recharacterizations.

The information on Form 5498 is important for the IRA owner for several reasons:

  1. Contribution Information: It provides the details of the contributions made to the IRA during the tax year. This information is important for the IRA owner to ensure that they do not exceed the contribution limits.
  2. Rollover Information: If the account owner rolled over funds from another retirement plan into an IRA, this will also be reported on Form 5498.
  3. Fair Market Value: It reports the fair market value (FMV) of the IRA as of December 31st of the tax year, which is important for those taking required minimum distributions (RMDs) because the RMD amount is based on the FMV of all IRAs at the end of the previous year.
  4. Required Minimum Distributions (RMDs): For individuals who are 72 or older, Form 5498 indicates if they are subject to RMDs. The form will indicate if the IRA owner must take RMDs, which are mandatory withdrawals based on the account balance and the account holder’s life expectancy.

Financial institutions are required to file Form 5498 with the IRS by May 31st of the year following the tax year for which the IRA contributions were made. A copy of Form 5498 is also sent to the IRA owner for their records and tax preparation purposes. It is not filed with the tax return by the individual but must be retained for their records.