Planning matters

Why is There a Tax Form in My Mailbox?

It’s June. Your tax return was filed several months ago. You thought you were done dealing with taxes until next year. Then IRS Form 5498 shows up in your mailbox. Now what?

What is IRS Form 5498?

This form is used by financial institutions to report information to you and the IRS about your IRA (Individual Retirement Arrangement), including Traditional, ROTH, SEP & SIMPLE plans. The information reported may include contributions, conversions, rollovers, fair market value of the account and Required Minimum Distribution (RMD) amounts.

Why is Form 5498 sent so late?

Financial institutions are required to mail Form 5498 to account holders and the IRS by May 31. This form is not meant to help you prepare your tax returns, even though it does help the IRS match what was reported on your tax return with your financial institution’s records. Also, because deductible contributions to IRAs may be made up to the due date of the tax return, contributions made in the current year for the prior year are reported on Form 5498.

What should I do with my Form 5498?

1.   Make sure it is accurate.

2.   Keep it with your other tax records.

What if I am required to take distributions from my IRA?

If Box 11 is checked on your Form 5498, it indicates you are subject to Required Minimum Distributions (RMDs) from your account. The formula for determining your required distribution is based on the fair market value (FMV) of your account on December 31st of the prior year. The FMV is shown in Box 5 of your form. If you are subject to RMD for 2019, the FMV of your account as of December 31, 2018 is divided by the applicable distribution period from the appropriate Uniform Lifetime Table published by the IRS. Learn all of the details by visiting https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds or talk to your financial planner.