For SEP and SIMPLE IRAs, the SEP and SIMPLE contributions are reported on the Form 5498 issued for the year they are actually deposited to the account, regardless of the year ‘for’ which they apply.
Form 5498 can also be used to report the fair market value
of the IRA balance as of December 31. However, if it is used to report the December 31 fair market value, it must be issued to the IRA owner by January 31. Most custodians/trustees choose to report the December 31 fair market value in another format, such as including a notification on the IRA owner’s year-end account statement, to the effect that the fair market value is $X amount and that it will be reported to the IRS.
For contributions made between January 1 and April 15, trustees and issuers should obtain the participant’s designation of the year for which the contributions are made.
Transfers: A direct trustee-to-trustee transfer from (a) a traditional IRA to another traditional IRA or to a SEP IRA, (b) a SIMPLE IRA to another SIMPLE IRA, (c) a SEP IRA to another SEP IRA or to a traditional IRA, or (d) a Roth IRA to a Roth IRA must not be reported on Form 5498.
Roth IRA conversions: The receipt of a conversion to a Roth IRA must be reported on Form 5498, even if the conversion is with the same trustee.
Recharacterizations. Each recharacterization of an IRA contribution must be reported. If a participant makes a contribution to an IRA (first IRA) for a year, the participant may choose to recharacterize the contribution by transferring, in a trustee-to-trustee transfer, any part of the contribution (plus earnings) to another IRA (second IRA). The contribution is treated as made to the second IRA (recharacterization). A recharacterization may be made with the same trustee or with another trustee. The trustee of the first IRA must report the amount contributed before the recharacterization as a contribution on Form 5498 and the recharacterization as a distribution on Form 1099-R. The trustee of the second IRA must report the amount received (FMV) in box 4 on Form 5498 and check the type of IRA box in box 7.
All recharacterized contributions received by an IRA in the same year must be totaled and reported on one Form 5498 in box 4. The FMV of the account may be reported on the same Form 5498 that is used to report a recharacterization of an IRA contribution and any other contributions made to the IRA for the year.
Important: The Tax Cuts and Jobs Act of 2017 repealed the option to recharacterize Roth conversions, for Roth conversions done after 2017. As such, only regular contributions to traditional IRAs and Roth IRAs may now be recharacterized.
Total distribution, no contributions: Generally, if a total distribution was made from an account during the year and no contributions, including rollovers, recharacterizations, or Roth IRA conversion amounts, were made for that year, Form 5498 need not be filed, neither is it necessary to furnish the annual statement to reflect that the FMV on December 31 was zero.
Required minimum distributions (RMDs). For each IRA that a custodian holds as of December 31 of the prior year, if an RMD is required for the year, the custodian must provide a statement to the IRA participant by January 31 regarding the RMD using one of two alternative methods described below. The custodian is not required to use the same method for all IRA participants; and can use Alternative one for some IRA participants and Alternative two for the rest. Under both methods, the statement must inform the participant that the custodian is reporting to the IRS that an RMD is required for the year. The statement can be provided in conjunction with the statement of the FMV
Alternative one. Under this method, include in the statement the amount of the RMD with respect to the IRA for the calendar year and the date by which the distribution must be made. The amount may be calculated assuming the sole beneficiary of the IRA is not a spouse more than 10 years younger than the participant. Use the value of the account as of December 31 of the prior year to compute the amount. See box 11 on page 15 for how to report.
Alternative two. Under this method, the statement informs the participant that a minimum distribution with respect to the IRA is required for the calendar year and the date by which such amount must be distributed. You must include an offer to furnish the participant with a calculation of the amount of the RMD if requested by the participant.
Electronic filing. These statements may be furnished electronically using the procedures described in part F of the 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G.
If the IRA participant is deceased, and the surviving spouse is the sole beneficiary, special rules apply for RMD reporting. If the surviving spouse elects to treat the IRA as the spouse’s own, then the custodian must report with the surviving spouse as the owner. However, if the surviving spouse does not elect to treat the IRA as the spouse’s own, then the custodian must continue to treat the surviving spouse as the beneficiary. Until further guidance is issued, no reporting is required for IRAs of deceased participants (except where the surviving spouse elects to treat the IRA as the spouse’s own).
Instructions for Forms 1099, 1098, 5498, and W-2G, available at www.irs.gov
Additional Helpful Information
Inherited IRAs( defined here). In the year an IRA participant dies, the IRA custodian generally must file a Form 5498 and furnish an annual statement for the decedent and a Form 5498 and an annual statement for each nonspouse beneficiary. An IRA holder must be able to identify the source of each IRA he or she holds for purposes of figuring the taxation of a distribution from an IRA, including exclusion from current year gross income as an eligible rollover distribution under section 402(c). Thus, the decedent’s name must be shown on the beneficiary’s Form 5498 and annual statement. For example, the custodian may enter “Brian Willow as beneficiary of Joan Maple” or something similar that signifies that the IRA was once owned by Joan Maple. The custodian may abbreviate the word “beneficiary” as, for example, “bene.”
For a spouse beneficiary, unless the spouse makes the IRA his or her own, the spouse is treated as a nonspouse beneficiary for reporting purposes.
Fair market value (FMV). the custodian must enter the FMV of the IRA on the date of death in box 5, on the decedent’s Form 5498 and annual statement; or may choose the alternate reporting method and report the FMV as of the end of the year in which the decedent died. This alternate value will usually be zero because the custodian will be reporting the end-of-year valuation on the beneficiary’s Form 5498 and annual statement. The same figure should not be shown on both the beneficiary’s and decedent’s forms. If the custodian choose to report using the alternate method, they must inform the executor or administrator of the decedent’s estate of his or her right to request a date-of-death valuation.
On the beneficiary’s Form 5498 and annual statement, the FMV of that beneficiary’s share of the IRA as of the end of the year must be shown in box 5. Every year thereafter that the IRA exists, the cuistodian must file Form 5498 and furnish an annual statement for each beneficiary who has not received a total distribution of his or her share of the IRA showing the FMV at the end of the year and identifying the IRA as described above. However, if a beneficiary takes a total distribution of his or her share of the IRA in the year of death, the custodian need not file a Form 5498 nor furnish an annual statement for that beneficiary, but must still file Form 5498 for the decedent.
If the custodian has no knowledge of the death of an IRA participant until after they are required to file Form 5498 (May 31), they are not required to file a corrected Form 5498 nor furnish a corrected annual statement. However, they must still provide the date-of-death valuation in a timely manner to the executor or administrator upon request.
Form 5498 should generally be issued to the IRS by May 31 .
Payers may file IRS Form 8809 to request an extension for filing Form 5498 with the IRS. This request must be filed by the original due date for filing the Form 5498 with the IRS. If the deadline falls on a non-(regular) business day (including weekends), the filing must be done on the next business day. Cite IRC § 7503.
An IRA includes all investments under one IRA plan. It is not necessary to file a Form 5498 for each investment under one plan. For example, if a participant has three certificates of deposit (CDs) under one IRA plan, only one Form 5498 is required for all contributions and the fair market values (FMVs) of the CDs under the plan. However, if a participant has established more than one IRA plan with the same trustee, a separate Form 5498 must be filed for each plan.