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What Is IRS Form 5498: IRA Contributions Information?

Updated for Tax Year 2014


OVERVIEW

Form 5498: IRA Contributions Information reports your IRA contributions to the IRS. Your IRA trustee or issuer - not you - is required to file this form with the IRS by May 31.


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When you save for retirement with an individual retirement arrangement, you probably receive a Form 5498 each year. The institution that manages your IRA must report all contributions you make to the account during the tax year on the form. Depending on the type of IRA you have, you may need Form 5498 to report IRA contribution deductions on your tax return.

Form 5498: IRA Contributions Information reports your IRA contributions to the IRS. Your IRA trustee or issuer – not you – is required to file this form with the IRS by May 31. You won't find this form in TurboTax, nor do you file it with your tax return. The copy you receive in the mail is a copy for your records.

Understanding Form 5498

Form 5498 reports various types of IRA contributions you make in a number of reporting boxes. Box 1 shows the amount you contributed to a traditional IRA; box 9 reports the amounts contributed to a Savings Incentive Match Plan for Employees (SIMPLE) IRA and box 10 covers the amounts you put into a Roth IRA.

Although a rollover or conversion of assets from one retirement plan into an IRA isn’t deductible, they are considered contributions and will be reported in boxes 2 and 3 of Form 5498. However, direct trustee-to-trustee transfers from a traditional IRA to another traditional IRA or to a SEP IRA, a SIMPLE IRA to another SIMPLE IRA, a SEP IRA to another SEP IRA or to a traditional IRA or a Roth IRA to another Roth IRA are not reported on Form 5498. If you’re unsure what type of IRA you have, your account administrator may indicate whether it’s a traditional, Roth, SIMPLE or a Simplified Employee Pension (SEP) in box 7.

Traditional IRA contributions

With a traditional IRA, you can make tax deductible contributions to the account and accumulate earnings within the IRA tax-free until you are required to begin making withdrawals - usually in the year you turn 70 1/2. When you start taking withdrawals, you then need to report the gross amounts as income on your tax return and pay the appropriate amount of income tax, if necessary.

There are limits on the amounts reported in box 1 of Form 5498 that you can deduct each year. Each year, the tax law imposes a maximum contribution amount that all taxpayers are subject to. However, if you’re covered under another tax-advantaged retirement plan at work or your spouse makes contributions to a different IRA account, you may not be eligible to take the full contribution deduction.

IRA deadline

The great thing about a traditional IRA is that, even if you make contributions in the following tax year, the IRS lets you take a deduction for some of these IRA contributions on your prior-year tax return (you must make the contributions by mid-April). In other words, if you are filing your 2014 taxes, the contributions you make to a traditional IRA through mid-April of 2015 may be deductible. This is why your account administrator has until May 31 to send Form 5498 to you.

Roth IRA contributions

Saving with a Roth IRA has some tax advantages, but you cannot use your contributions as a tax deduction. The reason that contributions to a Roth IRA aren’t deductible is because the withdrawals you make during retirement aren’t taxable.

However, you may be able to take the saver’s tax credit for some of those Roth IRA contributions (and traditional IRA contributions) reported in box 10 of Form 5498 if your income is below certain levels and you satisfy other requirements.

SIMPLE & SEP Plans

If you participate in a SIMPLE IRA at work, your employer can withhold contributions directly from each of your paychecks on a pretax basis, meaning income taxes are calculated on your salary only after reductions for your contributions. In this case, you cannot deduct the contribution amounts reported in box 9. When your employer uses an SEP plan instead, only your employer can make contributions to your IRA account, so the amounts you see in box 8 of Form 5498 aren’t deductible to you.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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