What is IRS Form 5498?
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Summary:
Form 5498 is a form submitted to the IRS by the custodian or issuer of your individual retirement arrangement (IRA) to report the contributions you’ve made up until the contribution deadline. This form lets you know the exact amount you’ve contributed during the year, in addition to whether you’ve exceeded your yearly contribution limit.
When you save for retirement with an individual retirement arrangement, you should receive a document titled “Form 5498 – IRA Contribution Information” in your mail each year. In this form, your IRA custodian will report to the IRS the total contributions you’ve made during the contribution period, as well as other important information such as the fair market value of the account.
There are a variety of different types of IRAs, each with its own benefits and drawbacks. If you’ve been saving for retirement with an IRA, then you should have received Form 5498 from your IRA custodian in a previous tax year. In this article, we’ll provide an in-depth explanation of what this form is, why it’s important, and what tax deductions you may receive.
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What is the purpose of IRS Form 5498?
Without Form 5498, the IRS wouldn’t know if you’ve actually made contributions to your IRA and whether you’re eligible for any tax deductions. To get this information, your IRA custodian — such as an investment advisor, a bank, credit union, or trust company — must report the total amount of your contributions to the IRS on Form 5498.
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IRA participants typically have until April 15 to make IRA plan contributions for the tax year. Because of this, custodians of the accounts usually have until May 31st to mail the form to participants as well as the IRS.
Types of Form 5498
There are various types of Form 5498 and each is intended for a different purpose:
- Form 5498. This is the standard form that reports contributions made to IRAs including traditional IRAs, SIMPLE IRAs, Roth IRAs, and SEP IRAs.
- Form 5498-ESA. This variation reports contributions made to a Coverdell Education Savings Account (ESA). The ESA is a trust or custodial account specifically designed to help families pay for education — similar to a 529 savings plan.
- Form 5498-SA. Specifically for medical-related accounts, this form reports contributions made to a Health Savings Account (HSA), Archer Medical Savings Account, or Medicare Advantage Medical Savings Account.
Who fills out Form 5498?
Your IRA custodian is responsible for filling out Form 5498 and sending a copy of it to you and the Internal Revenue Service by May 31st each year. Don’t worry if you’ve never filled out Form 5498 before; it’s not your responsibility as an IRA participant to do so.
Understanding Form 5498
Though it’s not your job to fill out Form 5498, it’s still beneficial for you to know what the numbers in Form 5498 mean. In this section, we’ll explain what some of the different boxes on the form represent so that you won’t be overwhelmed upon seeing them for the first time.
- Box 1. Contributions to traditional IRAs you made until the contribution deadline.
- Boxes 2 and 3. Rollovers and conversions from another plan into an IRA.
- Box 4. The amounts recharacterized from one type of IRA to another — earnings included as well.
- Box 7. Identifies your plan type — traditional IRA, SEP IRA, SIMPLE IRA, or Roth IRA.
- Box 8. The total contributions made to SEP IRAs for the year in which they’re received. This could include employer contributions as well as contributions made by a self-employed person to their own account.
- Box 9. The total contributions made to SIMPLE IRAs for the year in which they’re received. This could include employer contributions as well as contributions made by a self-employed person to their own account.
- Box 10. The total contributions made to Roth IRAs until the contribution deadline for the year.
- Box 11. Reports whether you need to start taking required minimum distributions (RMDs).
- Box 15a. Represents the fair market value of the investments in the IRA.
What does required minimum distribution mean?
Your required minimum distribution is the minimum amount you must take out from your IRAs each year — excluding Roth IRAs. Typically, you’re required to begin making withdrawals from your IRA, SIMPLE IRA, and SEP IRA by the time you reach 72 years old (70 ½ if you reach that age before January 1, 2020).
You don’t have to stick to the minimum required amount. However, know that the amount you withdraw will be included in your taxable income for the year — excluding any part of the withdrawal that was already taxed before.
To keep track of the differences between traditional and Roth IRAs, here’s a summary of the rules for both arrangements.
| FEATURES | TRADITIONAL IRA | ROTH IRA |
|---|---|---|
| Who can contribute? | You can contribute if you (or your spouse if filing jointly) have taxable compensation. Prior to January 1, 2020, you were unable to contribute if you were age 70 or older. | You can contribute at any age if you (or your spouse if filing jointly) have taxable compensation and your modified adjusted gross income is below certain amounts (see 2021 and 2022 limits). |
| Are my contributions deductible? | You can deduct your contributions if you qualify. | Your contributions aren’t deductible. |
| How much can I contribute? | The most you can contribute to all of your traditional and Roth IRAs is the smaller of:
| |
| What is the deadline to make contributions? | Your tax return filing deadline (not including extensions). For example, you can make 2021 IRA contributions until April 15, 2022. | |
| When can I withdraw money? | You can withdraw money anytime. | |
| Do I have to take required minimum distributions? | You must start taking distributions by April 1 following the year in which you turn age 72 (70½ if you reach the age of 70½ before January 1, 2020) and by December 31 of later years. | Not required if you are the original owner. |
| Are my withdrawals and distributions taxable? | Any deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable. Also, if you are under age 59½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception. | None if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be taxable. If you are under age 59½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an exception. |
Pro Tip
Not sure how much you’re required to withdraw from your IRA? Use the Required Minimum Distribution Worksheet to figure out an accurate number.
Why is it important to track my contributions?
Keeping track of how much you’ve contributed to your IRA can be helpful when it comes time to do your taxes. If you’re eligible for a tax deduction for your contributions, you can claim the deduction as an above-the-line deduction on line 32 of Form 1040.
If you own a business and make retirement contributions on behalf of your employees, you can claim these contributions as a business deduction on Schedule C of Form 1040.
Tax deduction on IRA contributions
Your traditional IRA contributions are usually tax-deductible. However, the deduction might be limited if you or your spouse are currently contributing to other employer-provided retirement plans.
From the years 2019 to 2022, you’re allowed to contribute a maximum of $6,000 yearly to all of your IRAs — $7,000 if you’re age 50 or older. So if you’ve contributed the maximum amount that you can put into your traditional IRA for the year, then your contributions should be fully deductible.
IMPORTANT! Keep an eye on the IRS website for changes to the maximum contribution limits as inflation could impact these amounts.
What if I exceed the contribution limits?
You’ll be taxed 6% for each year that the excess amount remains in the account — including any income earned on the excess contribution. To avoid interest from accruing, make sure you don’t go over the limit and withdraw any excess contributions as soon as you can.
Pro Tip
Bear in mind that contributions to your Roth IRA are not tax-deductible because withdrawals from these types of accounts are tax-free. Make sure to know the pros and cons of different IRA types before saving for retirement.
FAQs
Do I need to report Form 5498 on my tax return?
No, you are not required to report Form 5498 along with your annual tax return because it’s for informational purposes only. Moreover, you’ll usually receive this form at a much later date than the tax filing deadline, so you probably would’ve already finished filing your taxes by then.
If you want to claim a deduction on your IRA contributions, you can log into your IRA to access your yearly contribution information. And if somehow you end up not deducting the right amount on your tax return, you can file an amended tax return once you receive Form 5498 in the mail.
What is the difference between 1099-R and 5498?
A 1099-R is a form that reports potentially taxable withdrawals from certain types of accounts, such as your IRAs. You’ll generally receive one if you’ve withdrawn an amount of $10 or more during the tax year. In the form, you’ll see numbers representing how much you’ve taken out, how much of the distribution (withdrawals) was taxable, and whether there were any federal and state taxes withheld.
Simply put, Form 1099-R is a form documenting how much you’ve taken out of your IRA, whereas Form 5498 is a form documenting how much you’ve put in.
Another difference is that unlike Form 5498, your IRA custodian will need to mail Form 1099-R much earlier to you — by January 31st instead of May 31st.
What do you do if you don’t receive Form 5498?
If you did not make any contributions to your IRA for the tax year, you will not receive a Form 5498. However, if you did contribute to your retirement account and you still haven’t received your Form 5498 from your IRA custodian, the first step to take is to contact them directly. It’s possible the mailing address that they have on file was incorrect or that there was simply a delay in shipping.
Keep in mind that even though Form 5498 provides valuable information about your contributions for the year, you don’t need it to file your tax return. By referring to the statements from your IRA custodian, you can calculate your annual contribution and figure out how much your deductions should be.
Key Takeaways
- IRS Form 5498 is a form that provides information to the IRS about any retirement plan you may have. This includes the Roth IRA, SEP IRA, SIMPLE IRA, and traditional IRA.
- Participants of qualified retirement accounts usually have until the tax deadline to make contributions for the tax year. However, IRA custodians have until May 31st to issue Form 5498 to the IRS and send a copy to participants.
- If you’re eligible for a tax deduction for your IRA contributions, you can claim it on line 32 of Form 1040.
- For the year 2022, you’re able to contribute up to $6,000 a year to all of your IRAs. If you’re 50 years old or older, you can contribute an additional $1,000 each year.
- You most likely won’t receive your Form 5498 until May 31st. However, you can always log in to your retirement account to access your yearly contribution information before the tax deadline.
- Form 1099-R reports the distribution (withdrawal) of retirement benefits such as pensions and annuities, IRAs, profit-sharing plans, etc.
How to make tax season a breeze
Tax season can be quite intimidating, especially when there are so many different tax filing requirements, forms, and deadlines. Fortunately, there are plenty of resources available online that can help simplify the tax planning and preparation process. This includes tax preparation software that’ll help you maximize your deductions and minimize mistakes.
If you’re looking for some additional tax guidance this year or want someone who will provide personalized advice and answer any questions you may have, then hiring a tax professional might also be worth considering. But if you have a tight budget, there are plenty of free tax help programs and services as well.
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