No 5498 was filed by my self-directed IRA. How do I file them are and are there penalties?

Submitted by David Lynch on Fri, 2020-02-21 01:32

I created an investment trust to hold my self-directed 401(k) in 2016.

I was unaware of the fact that I had to file Form 5498, so no forms were filed with the IRS for 16, 17, or 18. In 2019, I did a roll-over from my traditional IRA into my 401(k). As part of the process I discovered the need to file the 5498.

I have researched, and not been able to find out how to filed prior year forms, other than simply file them. Which is fine, but I am concerned about whether there are penalties associated with the late forms.

Any assistance on this would be greatly appreciated.

Dave



Submitted by Alan - IRA critic on Fri, 2020-02-21 02:33

You indicate IRA in the thread subject, but say 401k in the text. Form 5498 does not apply to 401k accounts, just IRA accounts.

Submitted by David Lynch on Mon, 2020-02-24 15:01

Thank you for the response.  To clarify, I have a sole proprietor 401k account.  Previously, I had a traditional IRA; the former custodian of my IRA distributed the IRA assets to me, which pursuant to the power of attorney they provided as part of the distribution, my 401k custodian accepted and rolled in.Prior to 2019, my 401k did not have more than $250,000 in assets.  With the role-over, it is just below $250,000.  WIth additional contributions for 2019, however, it will exceed $250,000.  So I know I need to file the 5500-EZ this year. What do I file with the IRS to show that my 401k accepted the roll-over so that I don’t get taxed on the IRA as an early distribution?Thank you very much for your assistance.

Submitted by Alan - IRA critic on Mon, 2020-02-24 15:28

  • The 1040 Inst indicate that an IRA to qualified plan rollover must be explained in a statement included with the tax return, including when the IRA distribution is coded G. Indicate dates and amounts of the rollover and that your solo K received the rollover. This should eliminate IRS contact, but keep documentation just in case they ask for it. A statement from each plan showing the dates of distribution and rollover contribution should suffice.
  • Just curious – not clear why a POA would be required for this. Are you referring to perhaps a certification by you that the IRA rollover contains no IRA basis?

Submitted by David Lynch on Mon, 2020-02-24 17:16

Yes – that is it.

Submitted by William Tuttle on Fri, 2020-02-21 03:18

As Alan pointed out, If this is a one-participant 401k. There is no Form 5498 required. However, if after the IRA rollover contribution, your year-end balance in any of those years was > $250K. You were required to file Form 5500-EZ and there are substantial penalties for failure to file.

Submitted by David Lynch on Mon, 2020-02-24 17:17

Thank you for the information.  I really appreciate the assistance!

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