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

    Philip Royce Onward

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

    Published April 18, 2018




    (Note: On April 17, 2018 the IRS issued IR-2018-100, April 17, 2018, which provided taxpayers with an additional day (through April 18) to file their 2017 tax return and pay income taxes. This extension was granted due to IRS system issues on April 17, 2018. What the IRS News Release did not officially address is whether it extended the contribution deadline for 2017 tax year contributions to April 18, 2018. Consequently we show April 17, 2018 as the contribution deadline below.)

    The 2017 tax-filing deadline and individual retirement account (IRA) regular contribution deadline is April 17, 2018. With the 2017 IRA contribution reporting deadline right around the corner, it is time to look at some of the IRA reporting requirements.

    IRS Form 5498 Overview

    2017 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, 2017, and contributions made to the IRA during and for 2017.

    Form 5498 provides the IRS with information necessary for monitoring compliance with federal income tax laws. Form 5498 is prepared for IRA owners, and after an IRA owner’s death, for beneficiaries. 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.

    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. An IRA custodian/trustee may include the telephone number in any conspicuous place on the Form.

    New for 2017 Reporting

    Report late rollover contributions certified by the IRA owner under IRS Revenue Procedure 2016-47  in boxes 13a and 13c. See details later under “Postponed Contribution Reporting”.

    Reporting Deadline and Form 5498 Filing

    The 2017 Form 5498 must be sent to the IRS and to an IRA owner or beneficiary by May 31, 2018. 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 Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W2-G.

    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 2017—this includes contributions made during 2017, and by April 17, 2018 designated for 2017
    • Box 2 reports rollover contributions made to the IRA during 2017—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 2017
    • Box 4 reports recharacterized contributions made to the IRA during 2017
    • Box 5 reports the December 31, 2017 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) plan contributions, generally classifying it as a SEP IRA, check the “SEP” box; if the custodian/trustee doesn’t know whether an IRA contains SEP deposits, check the "IRA" box
    • Box 8 reports employer SEP plan contributions made to a traditional/SEP IRA during 2017
    • Box 9 reports employer contributions made to a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA during 2017
    • Box 10 reports regular (including catch-up) Roth IRA contributions made for tax year 2017—this includes contributions made during 2017, and by April 17, 2018 designated for 2017
    • Box 11 informs an IRA owner and the IRS that the IRA owner must take a required minimum distribution (RMD) for 2018
    • Box 12a (optional) reports the 2018 RMD deadline to an IRA owner
    • Box 12b (optional) reports the 2018 RMD amount to an IRA owner
    • Box 13a reports the amount of any postponed contribution made for a prior year, or a late rollover contribution (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, or a late rollover 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 – FMV of Certain Specified Assets: Enter the FMV of the investments in the IRA that are specified in the categories identified below.
      • Box 15b – Code(s): Enter the code for the type(s) of investments held in the IRA for which the FMV is reported in box 15a. A maximum of two codes can be entered in box 15b. If more than two codes apply, enter code H. [next info is sub bullets] A-Stock or other ownership interest in a corporation that is not readily tradable on an established securities market. B-Short- or Long-term debt obligation that is not traded on an established securities market. C-Ownership interest in a limited liability company or similar entity (unless the interest is traded on an established securities market). D-Real estate. E. Ownership interest in a partnership, trust, or similar entity (unless the interest is traded on an established securities market). F-Options contract or similar product that is not offered for trade on an established option exchange. G-Other asset that does not have a readily available FMV. H-More than two types of assets (listed in A through G) are held in this IRA.
       
    • 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

    Form 5498 Image

    Postponed and Late Rollover 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 (e.g., made in 2017 for the 2015 tax year). 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 the Special reporting for U.S. Armed Forces in designated combat zones information included in the Instructions for Forms 1099-R and 5498.

    Under IRS Revenue Procedure 2016-47, an IRA owner may be able to self-certify eligibility to complete a rollover after the 60-day period has expired. Report the amount of the late rollover in box 13a, leave box 13b blank, and use indicator code “SC” in box 13c.

    Conclusion

    As you can see, the IRA contribution reporting requirements are quite detailed. The Instructions for Forms 1099-R and 5498 is a great resource when trying to find answers to specific IRA 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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