IRS Form 5498 Instructions
If you have an IRA (individual retirement arrangement), you should know about IRS Form 5498—IRA Contribution Information. Form 5498 outlines any transaction in which money transferred into an IRA for the previous year. It’s issued by your broker or financial institution which oversees your IRA.
This article will go over IRS Form 5498 so you can better understand how it can help with your tax planning. Specifically, we’ll go over:
- What Form 5498 is
- How to read and understand your IRS Form 5498
- How Form 5498 can help your tax planning
Let’s start with how to read and understand your Form 5498.
Table of contents
- IRS Form 5498 instructions
- What is IRS Form 5498?
- Variations of Form 5498
- Roth conversions: The hidden tax planning opportunity
- Video walkthrough
- Frequently asked questions
- Where can I find a copy of IRS Form 5498?
- Related tax forms
- What do you think?
IRS Form 5498 instructions
Form 5498 contains a lot of information. Let’s take a look at the form, and we’ll go through each of the sections.
On the left, you’ll see basic information, such as name, address, and TIN. TIN stands for taxpayer identification number. For individuals, it is the same as your Social Security Number.
On the right are boxes 1-15. These contain most of the important information, and we’ll go through them in order.
Box 1: IRA contributions
Shows total IRA contributions for the tax year. Does not include amounts in boxes 2-4, 8-10, 13a, or 14a. Also does not indicate whether or not you can take a tax deduction for these contributions.
Box 2: Rollover contributions
Shows the rollover amounts from another tax-advantaged account. This could include:
- 60 day IRA rollovers
- Direct transfer or indirect rollovers from qualified plans, like a 401k or 403b
- Qualified rollovers into a Roth IRA (but not Roth conversions, which are reported in Box 3)
- Military death gratuity
- Servicemember’s Group Life Insurance (SGLI) proceeds
Box 3: Roth IRA conversion amount
Shows the amount converted to a Roth IRA. This conversion amount could be from a traditional IRA, SEP IRA, or SIMPLE IRA.
Box 4: Recharacterized contributions
The amount of contributions (plus accumulated earnings) that were recharacterized from a different account.
Box 5: FMV (fair market value) of account
This is the account balance as of December 31 of the tax year reported. This information is required to calculate RMDs.
Box 6: Life insurance cost
Used to report the cost of life insurance in the case of endowment contracts.
Box 7: IRA Type
Annotates whether the account is a traditional IRA, SEP IRA, SIMPLE IRA or Roth IRA.
Box 8: SEP contributions
Includes employer contributions to a SEP IRA for the tax year reported.
- Does not include employee contributions, which are reported in Box 1
- Does include contributions by a self-employed individual
- Includes contributions in the reported tax year for the previous tax year.
For example, a 2022 Form 5498 would include 2021 contributions that were made in calendar year 2022. But it would not include 2022 contributions made in 2023. These contributions would be reported in 2023 because they are for the prior tax year.
Box 9: SIMPLE contributions
Includes employer contributions to the plan. Also includes contributions in the reported tax year that were made for the previous tax year.
Box 10: Roth IRA contributions
Includes total Roth IRA contributions made for the tax year, through the tax filing deadline. Does not include Roth conversions.
Box 11: If checked, must take RMD for the subsequent tax year
For example, if Box 11 is checked on the 2022 Form 5498, this indicates the taxpayer must take an RMD for 2023.
Box 12: RMD
Consists of 2 blocks: Date and amount. If required, the IRA trustee will report the RMD date in Box 12a and RMD amount in Box 12b.
Box 13: Postponed contribution
Usually blank. Consists of 3 blocks-Dollar amount, year, and reason code. If required, the IRA trustee will report the postponed contribution amount in Box 13a, year in Box 13b, and reason code in Box 13c. Reason codes include:
- Active duty service in a qualified combat zone
- ‘Affected taxpayers’ as designated in an IRS News Release regarding federally declared disaster areas
- Rollovers of a qualified plan offset amount
- Late contributions due to circumstances outlined in Section 3.02(2) of Rev. Proc. 2020-46
Box 14: Repayments
Consists of 2 blocks-Dollar amount and reason code. If required, the IRA trustee will report the repayment amount in Box 14a and reason code in Box 14b. Reason codes include:
- Qualified reservist distribution
- Qualified disaster distribution
- Qualified birth or adoption distribution
Box 15: FMV
Fair market value of certain assets. Consists of 2 blocks-Dollar amount and reason code.
If required, the IRA trustee will report the FMV amount in Box 15a and reason code in Box 15b.Reason codes include illiquid assets such as real estate, closely held company stock, or partnership interests.
A full list of reason codes is contained in IRS Instructions for Forms 1099 and 5498.
What is IRS Form 5498?
According to the IRS website, Form 5498 is an IRA contribution information form. It is used to “report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account.”
Form 5498 also includes additional information used to calculate RMDs. This includes:
- RMD Date
- Year End Account Balance
Finally, IRS Form 5498 also contains informational fields for other IRA-related items. This might include things like:
- Estimated fair market value of illiquid assets, such as real estate or closely held stock
- Reason codes for late contributions, such as qualified disaster areas or duty in qualified combat zones
- Repayment of a qualified reservist distribution
Variations of Form 5498
Form 5498 is used to report IRA transactions. However, other versions of the form are used to report similar transactions in other tax-advantaged accounts. These include:
- Form 5498-QA: Used to report contributions to a qualified ABLE (Achieving a Better Life Experience) account. ABLE accounts are tax-advantaged savings programs for qualified people with disabilities.
- Form 5498-ESA: Used to report contributions to a Coverdell Education Savings Account (ESA)
- Form 5498-SA: Used to report contributions to one of the following:
- Health Savings Accounts (HSA)
- Archer Medical Savings Accounts (MSA)
- Medicare Advantage MSA
Form 5498 is issued by the financial institution responsible for the IRA for informational purposes. However, the taxpayer is most likely to get any substantial benefit from Form 5498.
Let’s discuss what the hidden tax opportunity is.
Roth conversions: The hidden tax planning opportunity
As previously mentioned, Form 5498 is issued by the financial institution responsible for your IRA. It is issued for any year in which money or securities were transferred into that account. This could include (but is not limited to):
- IRA contributions (including SEP, SIMPLE, or Roth IRA contributions)
- Roth conversions
An account holder will receive a Form 5498 for each account. If you make a non-deductible contribution to your traditional IRA, then do a backdoor Roth conversion, you would receive a Form 5498 for both your traditional IRA as well as your Roth IRA.
In addition, you would receive a Form 1099-R since money left your traditional IRA.
What does this mean?
For IRA owners who are eligible to directly contribute to a Roth IRA, or to fully deduct traditional IRA contributions on their tax return, this form won’t mean much. This simply is an acknowledgement of the money you contributed to your IRA in a given year.
However, there is a situation where this will come in handy. That is when your traditional IRA ends up having a combination of deductible (pre-tax) & non-deductible (after-tax) contributions.
Here are two common scenarios, where this might occur:
At the beginning of your career, you start off in a lower tax bracket. You contribute directly to a traditional IRA while contributing to your workplace retirement plan. That way, you maximize your retirement savings.
Over time, you creep into the income phase out limits for being able to deduct your IRA contributions on your tax return. Your IRA now has a combination of pre-tax and after-tax contributions.
You’ve been making non-deductible IRA contributions for a while. But you never converted them to a Roth IRA. You change jobs.
As part of this change, you change your 401k participation. To simplify your finances, you rollover your previous 401k into your traditional IRA. You now have a combination of pre-tax contributions & after-tax contributions.
How do I figure out which contributions were pre-tax and which ones were after-tax?
Ideally, you would use IRS Form 8606-Nondeductible IRAs, to help keep track of your after tax contributions. But many people don’t file Form 8606 each year. Or at all.
This happens for many reasons:
- They don’t know they’re supposed to file Form 8606.
- They don’t tell their accountant about the IRA contribution.
- Their tax preparation software doesn’t properly prompt them to do so.
Fortunately, you can use your Form 5498, in conjunction with each year’s tax returns to figure this out.
To do this, you compare Block 1 (IRA contributions other than amounts in boxes 2-4, 8-10, 13a, and 14a) to the ‘IRA deduction’ line on your tax return.
Based upon year, you’ll find this line item as follows:
- 2021: Schedule 1, Line 20
- 2019 & 2020: Schedule 1, Line 19
- 2018: Schedule 1, Line 32
- 2017 & prior year returns: 1040, Line 32
One of three things will happen:
1. The number in Block 1 equals the respective number on your tax return.
This means that your IRA contribution was fully deducted for that year, and is considered a pre-tax contribution.
2. There is no number for IRA deduction on your tax return, but there is a number in Block 1 of your 5498.
This means that your IRA contribution was not deducted at all that year, and is considered an after-tax contribution.
3. There are numbers in both forms, but they’re different.
This means that your IRA contribution was partially deducted in that year. The difference between the two numbers is the amount of your after-tax contributions.
This usually happens when you’re in the phase-out of your IRA contribution deduction eligibility.
For example, in 2021, a single tax filer (participating in an employer-sponsored retirement plan) could:
- Fully deduct their IRA contribution if their modified adjusted gross income (AGI) is $66,000 or less,
- Not deduct their IRA contribution at all if their modified AGI was $76,000 or more, or
- Partially deduct their IRA contribution if their modified AGI was between $66,000 and $76,000. This is known as a phase-out.
You’ll need to calculate this amount for each year that you contributed to an IRA. The total number is the total of your after-tax contributions.
What you must do before starting your conversions
The most important thing that you do is to discuss the strategy with your accountant before you start doing conversions. You want to achieve 3 things:
- Your accountant knows of your strategy and agrees with it. By preparing your tax return, they’re going to be telling the story after the fact. So it’s worth making sure they’re onboard with the big picture before moving forward. And if not, then it’s worth taking the time to learn what adjustments you need to make so they’re onboard.
- You’ve reviewed that year’s plan as part of your tax planning. This is a little different.
- You’re comfortable with the actual mechanics. This means that if you need to open a Roth IRA, then you actually open the Roth IRA. Likely, your accountant will be in a situation to advise on what you should be doing, but might not be in control of the actual transactions. That falls to you or your investment advisor (if you have one). If you’re working with an investment advisor, then your accountant and investment advisor should be on the same page in terms of what needs to be done and when.
What if I can’t find my Form 5498s?
Contact your financial institution or your financial advisor. You should be able to have them send you copies for each year that you deposited funds into an IRA they manage. This is the preferred approach.
If you have changed custodians over the years, or have many years of IRA contributions, this might be difficult. However, if you keep paper (or electronic copies) of your statements, you should be able to document when deposited funds reached your IRA.
In either case, you should discuss what documentation you do have with your accountant or tax advisor, so they can decide how to proceed.
More important are the tax returns for each year. They contain the information telling you how much of your contributions were deducted (pre-tax), and how much were never deducted (after-tax).
Watch this instructional video so you can better understand each filed in your Form 5498.
Frequently asked questions
IRS Form 5498 is used to report contributions into any IRA. This includes:
IRS Form 5498 is used to report any money or assets transferred into an IRA. This includes contributions, catch up contributions, rollovers from another retirement account, Roth conversions into the IRA, and recharacterizations of Roth contributions.
The deadline for taxpayers to receive their Form 5498 from their IRA custodian is May 31 of the following tax year. If the due date falls on a weekend or federal holiday, then Form 5498 is due the following business day.
However, the FMV/RMD information reported on Form 5498 is due on January 31. Custodians must send Form 5498-ESA to accountholders by April 30.
There are three copies of each Form 5498 issued. They contain identical information and they each go to different parties:
Copy A: Copy A goes to the Internal Revenue Service.
Copy B: Copy B goes to the taxpayer. This is the copy you should expect to receive from your IRA trustee or IRA custodian.
Copy C: Copy C is retained by the IRA custodian.
Most likely, not. Form 5498 is an informational form and not required to file a tax return.
If you do Roth conversions, you may need your Form 5498s, as well as your old tax returns, so your tax preparer properly calculate your tax liability, or in case of an IRS audit.
Where can I find a copy of IRS Form 5498?
Your IRA custodian should give you a copy of IRS Form 5498 after the end of the tax year. However, we’ve enclosed a copy of the latest version for your convenience.