How Important is Form 5498 and What is It’s Purpose Anyway?

Submitted by Richard Rea on Mon, 2019-04-08 14:59

Looking through the historical paper files of the half dozen family “IRAs” which are contributed to yearly there are Form 5498s for some years in some accounts but no account have a complete record of Form 5498 for each year.What is the purpose of this form anyway? Goes from Custodian to account holder but NOT to the IRS?TIA



Submitted by Alan - IRA critic on Mon, 2019-04-08 15:24

  • Form 5498 is issued to both the account holder and the IRS. The form reports all contributions made to an IRA, and indicates whether they are regular contributions, conversions, or rollover contributions.  That said, the form is not revised if a regular contribution is recharacterized or removed with earnings, or is an excess contribution and not removed. However, it does indicate what contributions are made originally.
  • Another purpose of the 5498 (or substitute statement) is to report the year end value of IRA accounts. This is used for RMD calculation or to determine the taxable amount of distributions for TIRAs with basis. These forms should be retained indefinitely, but if lost more recent copies can be requested from the IRS.

  

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