Question: I have a Roth IRA account, a traditional IRA account, and a SEP-IRA retirement account. I recently received copies of Form 5498 in the mail from the custodian of my accounts for my Roth account and for my SEP account. They show the dollar amount of the contributions I made and the value of my accounts at the end of last year. What is the purpose of Form 5498?
Answer: The IRS requires all custodians of IRA accounts (i.e., banks, brokerage firms, and mutual fund companies) to report an account holder’s contributions no later than June 1 of each year. Custodians report these contributions to the IRS using Form 5498 and they also send a copy to you as the account holder. Form 5498 is labelled as “IRA Contribution Information,” and true to that name, it reports the amount of your contributions. It will also show the value of your account on December 31, along with other information. There are different boxes on the form for reporting contributions to different types of IRAs, including a regular IRA, a rollover IRA, a SEP-IRA, a SIMPLE IRA, and a Roth IRA.
Question: Why didn’t I receive a Form 5498 for my traditional IRA?
Answer: If you made a contribution to your IRA account between January 1 of last year and April 15 of this year, you should have received a Form 5498. If you made a contribution and did not receive the form, check with your custodian. Custodians who provide account access on their websites may make these forms available electronically.
Question: Do I need these forms for my tax return?
Answer: Not specifically, but you should verify that any traditional or Roth IRA contributions you enter on your tax return matches the information that your custodian sent to the IRS.
Question: Why do I receive Form 5498 in May and not in January or February like other forms I use to file my return?
Answer: The IRS requires custodians to report contributions made between January 1 of the preceding calendar year and April 15 of the current year, which is the last day you can make a contribution to a traditional or Roth IRA for the preceding tax year. After April 15 custodians have until June 1 to file Form 5498 for all account holders.
Question: The amount that I contributed to my SEP account as a tax year 2013 deduction is different from the amount shown on my Form 5498. Do I need to have this corrected?
Answer: Probably not, because the amount you deduct during the tax year may differ from the amount you contribute during the reporting period. Remember that SEP contributions, unlike traditional and Roth IRA contributions, can be made anytime up to the filing deadline plus extensions. This means you can put your return on extension until October 15 and gain an extra six months to contribute to your SEP.
For example, if you put your 2013 return on extension until October 15, 2014 and make a $10,000 SEP contribution on October 1, 2014 and deduct it on your 2013 return, that $10,000 contribution will appear on your 2014 Form 5498, even though you are deducting it on your 2013 tax return.
Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment manager and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey. He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning. Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA 93940 or email them to firstname.lastname@example.org.