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About Form 5498

An IRS Form 5498 must be filed for any individual retirement arrangement (IRA) engaged or maintained during the previous calendar year. An exception is made if no contributions, of any kind, whether rollovers, re-characterizations or conversions were made that year.

Direct rollovers from qualified plans must be included on the form. On the other hand, direct trustee-to-trustee transfers from a traditional IRA to another traditional IRA, or a simplified employee pension, do not. Individuals with IRAs will receive a 5498 form every year from their financial institution sometime in late April or May. They have an option to make contributions throughout the year, ending on April 15th Spousal IRAs have to be filed on their separate form.

Recharacterizations of IRA contributions must be reported. A participant in an IRA has the option after one year, to recharacterize or, in essence, transfer a contribution to a second IRA. In this case the trustee of the first IRA must report the amount contributed before re-characterizing.

Catch-up contributions, made by participants who are 50 years or older (for whom the contribution limit is raised from $5000 to $6000) may be made under salary reduction or a SIMPLE IRA plan. It is necessary to report any conversion of an IRA into a Roth IRA. In the case of any revocation of a traditional, Roth, or SIMPLE IRA after seven days, or its closure for at any time, a Form 5498 must be filed to report the various forms of contribution to the IRA, whether regular, rollover or conversion. Individual IRA conversions, either 60-day rollovers or direct trustee-to-trustee transfers are not considered contributions. One is still allowed to make the maximum allowable IRA contribution after rolling over an IRA.

Special rules for filing apply to certain citizens, such as U.S. military personnel stationed in combat zones or qualified hazardous duty areas. Such personnel have an additional period after the normal contribution due date (April 15th) to make contributions, equal to the time they were in the combat or hazardous area, plus 180 days. Special rules for filing may also apply for individuals living in areas deemed disaster zones by the U.S. president.

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Erich J. Ruth

Erich J. Ruth provides technical support for National Software which is the parent company for 1099FIRE. 1099FIRE develops and markets a comprehensive range of products that enables any size of business or institution to effectively manage and comply with year-end filing requirements. 1099FIRE is an employee-owned company located in Phoenix, Arizona.

If you have any questions or comments about our software, feel free to contact us at any time.

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