Individual Retirement Account Contribution Reporting – IRS Form 5498 | Wolters Kluwer
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  • Individual Retirement Account Contribution Reporting – IRS Form 5498

    Philip Royce Onward

    by Phil Royce, Consultant, Tax Advantaged Accounts, Wolters Kluwer

    Published March 14, 2017

    The 2016 tax-filing deadline and individual retirement account (IRA) regular contribution deadline is April 18, 2017. With the 2016 IRA contribution reporting deadline right around the corner, it is time to look at some of the IRA reporting requirements.

    IRS Form 5498 Overview

    2016 IRA contributions are reported on Internal Revenue Service (IRS) Form 5498, IRA Contribution Information. With the exception of IRA-to-IRA transfers, Form 5498 reports all contribution types to an IRA. The Form indicates the IRA type it represents, the IRA’s fair market value (FMV) on December 31, 2016, and contributions made to the IRA during and for 2016.

    For an IRA owner, or a beneficiary after an IRA owner’s death, Form 5498 provides the IRS with information necessary for monitoring compliance with federal income tax laws. For an IRA owner, it is a summary of his/her annual IRA contribution activity. If an individual has multiple IRA agreements (plans) with an IRA custodian/trustee, the custodian/trustee files a separate Form 5498 for each IRA agreement/plan. The IRS Instructions for Forms 1099-R and 5498 provide the necessary details to ensure proper and timely IRA contribution reporting.

    Reporting Deadline and Form 5498 Filing

    The 2016 Form 5498 must be sent to the IRS and to an IRA owner or beneficiary by May 31, 2017. Most financial organizations will submit these forms to the IRS electronically, either through their data service provider, or through a third-party vendor such as Wolters Kluwer Account Recordkeeping Services. The information in this article is based on the IRS instructions for paper reporting. The electronic reporting requirements may vary slightly. For specific instructions regarding electronic reporting to the IRS, see IRS Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G.

    Form 5498 identifies an individual (i.e., IRA owner or beneficiary) by name, address on record with the IRA custodian/trustee, and taxpayer identification number (TIN), including Social Security number (SSN) or individual taxpayer identification number (ITIN). Treasury Regulation 301.6109-4 allows filers of Form 5498 to truncate an individual’s TIN on paper or electronic payee statements. A TIN is sensitive information and there is a risk that this information could be misappropriated from an IRA statement and misused in various ways, including facilitation of identity theft. A TIN is truncated by replacing the first five digits of the nine-digit number with asterisks or Xs.

    Box-by-Box Details

    Now we will take a look at the specifics of Form 5498, with a box-by-box tour:

    • Box 1 reports regular (including catch-up) traditional IRA contributions made for tax year 2016—this includes contributions made during 2016 and by April 18, 2017 for 2016
    • Box 2 reports rollover contributions made to the IRA during 2016—this includes rollovers from IRAs of the same type and rollovers and direct rollovers from qualified employer plans
    • Box 3 reports conversion contributions made to a Roth IRA during 2016
    • Box 4 reports recharacterized contributions made to the IRA during 2016
    • Box 5 reports the December 31, 2016 FMV of the IRA or the beneficiary's share of an inherited IRA
    • Box 6 reports the cost of life insurance to certain types of endowment contracts (does not apply to IRAs)
    • Box 7 identifies the IRA type; if a traditional IRA contains simplified employee pension (SEP) deposits, check the “SEP” box; if you don’t know whether a traditional IRA contains SEP deposits, a custodian/trustee may check the "IRA" box
    • Box 8 reports employer SEP plan contributions made to a traditional/SEP IRA during 2016
    • Box 9 reports employer contributions made to a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA during 2016
    • Box 10 reports regular (including catch-up) Roth IRA contributions made for tax year 2016—this includes contributions made during 2016 and by April 18, 2017 for 2016
    • Box 11 informs an IRA owner and the IRS that the IRA owner must take a required minimum distribution (RMD) for 2017
    • Box 12a (optional) reports the RMD deadline to an IRA owner
    • Box 12b (optional) reports the RMD amount to an IRA owner
    • Box 13a reports the amount of any postponed contribution made for a prior year (see details later)
    • Box 13b reports the year for which a postponed contribution was made (see details later)
    • Box 13c reports the code reflecting the reason the individual made a postponed contribution (see details later)
    • Box 14a reports the amount of a qualified reservist distribution or designated disaster distribution repayment
    • Box 14b reflects the code for the distribution type being repaid in box 14a (“QR” for qualified reservist distribution repayments and “DD” for designated disaster distribution repayments)
    • Boxes 15a and 15b are used to report the FMV of “certain specified assets” held in an IRA. Specific box instructions are as follows:
    • Box 15a reports the value of an investment(s) which is typically harder to value and may include, but is not limited to, closely held stock, real estate, option contracts, and ownership interest in a limited liability. See the IRS Instructions for Forms 1099-R and 5498 for more information, and a specific list of what the IRS considers “certain specified assets”
    • Box 15b reports a special code(s) that identifies the asset type(s) reported in box 15a
    • The account number box reports any unique number that the custodian/trustee assigns that will distinguish the specific account; an IRA custodian/trustee must provide an account number if it is filing more than one Form 5498 for an individual with multiple accounts/IRA plans; the IRS encourages use of the recipient's account number on paper forms if the financial organization uses the account number rather than the name or TIN for identification purposes

    Center Copy Insights Article IRA Contribution Reporting Form 5498(2016)

    Postponed Contribution Reporting – Boxes 13a, b, and c

    Taxpayers in federally designated disaster areas may be granted additional time to file tax returns and make IRA contributions. These contributions can be reported on a Form 5498 for the year in which the contribution is made. Postponed contribution reporting is as follows:

    • The contribution amount is shown in box 13a
    • The tax year for which the contribution is made is shown in box 13b
    • Use indicator code “FD” in box 13c

    Search for “tax relief in disaster situations” on the IRS website at www.irs.gov for specific disaster relief information.

    Military personnel returning from overseas may be able to make contributions for previous years when they were out of the United States. For specific information on this type of postponed contribution, including the appropriate indicator codes for box 13c, see Special reporting for U.S. Armed Forces in designated combat zones included in the Instructions for Forms 1099-R and 5498.

    The IRS encourages IRA custodians/trustees to include the telephone number of a person to contact who can answer questions about information provided on Form 5498. A custodian/trustee may include the telephone number in any conspicuous place on the Form.

    Conclusion

    As you can see, the IRA contribution reporting requirements are quite detailed, and have been significantly expanded over the years. The IRS Instructions for Forms 1099-R and 5498 is a great resource when trying to find answers to specific reporting-related questions. Additionally, we will keep you informed of year-to-year reporting changes at Wolterskluwer.com/Insights (filter by clicking on Industry and selecting Individual Retirement Accounts).

    For an opportunity to learn more about IRAs and other tax-advantaged accounts including Health Savings Accounts, consider joining us for one of our Live Streaming events which are offered on a variety of IRA related topics. Click here for more information on training opportunities available to you, or you can call us at 1-800-552-9408.



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