Overview
The 2023 federal income tax-filing deadline and individual retirement account (IRA) regular contribution deadline for most individuals was April 15, 2024. Furthermore, the 2023 IRA contribution reporting deadline is May 31, 2024. With these deadlines fast approaching, it is time to look at the IRA reporting requirements applicable to IRA custodians/trustees.
IRS Form 5498 in general
Contributions made to IRAs are reported on Internal Revenue Service (IRS) Form 5498, IRA Contribution Information. Other than IRA-to-IRA transfers, Form 5498 reports all contribution types to an IRA. Additionally, the Form reports the December 31 fair market value (FMV) and the IRA type it represents.
Form 5498 provides the IRS with information necessary for monitoring compliance with federal income tax laws. Form 5498 is prepared for IRA owners, and after an IRA owner’s death, for beneficiaries. For an IRA owner, it is a summary of his/her annual IRA contribution activity. If an individual has signed multiple IRA agreements (i.e., established multiple IRA plans) with an IRA custodian/trustee, the custodian/trustee files a separate Form 5498 for each IRA plan. The IRS’s 2023 Instructions for Forms 1099-R and 5498 provide the necessary details to ensure proper and timely IRA contribution reporting.
The IRS encourages IRA custodians/trustees to include the telephone number of a person to contact who can answer questions about information provided on Form 5498. An IRA custodian/trustee may include the telephone number in any conspicuous place on the Form.
Reporting deadline and Form 5498 filing
As mentioned earlier, the 2023 Form 5498 filing deadline is May 31, 2024. It is by this date Form 5498 must be sent to the IRS and to IRA owners and beneficiaries. Most financial organizations will submit these forms to the IRS electronically, either through their data service provider, or through a third-party vendor such as Wolters Kluwer’s Account Recordkeeping Services. The information in this article is based on the IRS instructions for paper reporting. The electronic reporting requirements may vary slightly. For specific instructions regarding electronic reporting to the IRS, see Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W2-G. Additionally, see the article IRA, HSA, and CESA reporting: Electronic filing mandate will be all inclusive that was recently posted to Expert Insights.
Form 5498 identifies an individual (i.e., IRA owner or beneficiary) by name, address on record with the IRA custodian/trustee, and taxpayer identification number (TIN), including Social Security number (SSN) or individual taxpayer identification number (ITIN). Treasury Regulation 301.6109-4 allows filers of Form 5498 to truncate an individual’s TIN on paper or electronic payee statements. A TIN is sensitive information and there is a risk that this information could be misappropriated from an IRA statement and misused in various ways, including facilitation of identity theft. A TIN is truncated by replacing the first five digits of the nine-digit number with asterisks or Xs.
Box-by-box details
Following are the specifics of Form 5498, with a box-by-box tour:
- Box 1 reports regular (including catch-up) contributions made to a traditional IRA for tax year 2023—this includes contributions made during 2023, and through April 15, 2024, designated for 2023.
- Box 2 reports rollover contributions made to the IRA during 2023—this includes rollovers from IRAs of the same type and rollovers and direct rollovers from qualified employer plans, however, it does not include late rollovers under the self-certification provision.
- Box 3 reports conversion contributions made to a Roth IRA during 2023.
- Box 4 reports recharacterized regular contributions made to the IRA during 2023.
- Box 5 reports the December 31, 2023, FMV of an individual’s IRA or a beneficiary's share of an inherited IRA.
- Box 6 reports the cost of life insurance to certain types of endowment contracts (does not apply to IRAs).
- Box 7 identifies the IRA type; if a traditional IRA contains simplified employee pension (SEP) plan contributions, generally classifying it as a SEP IRA, check the “SEP” box; if the custodian/trustee doesn’t know whether an IRA contains SEP deposits, check the "IRA" box.
- Box 8 reports employer SEP plan contributions made to a traditional/SEP IRA during 2023.
- Box 9 reports employer contributions made to a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA during 2023.
- Box 10 reports regular (including catch-up) contributions made to a Roth IRA for tax year 2023—this includes contributions made during 2023, and through April 15, 2024, designated for 2023.
- Box 11 informs an IRA owner and the IRS that the IRA owner must take a required minimum distribution (RMD) for 2024.
- Box 12a (optional) reports the 2024 RMD deadline to an IRA owner.
- Box 12b (optional) reports the 2024 RMD amount to an IRA owner.
- Box 13a reports the amount of any postponed contribution made for a prior year, or a late rollover contribution (see details later).
- Box 13b reports the year for which a postponed contribution was made (see details later).
- Box 13c reports the code reflecting the reason the individual made a postponed contribution, or a late rollover contribution (see details later).
- Box 14a reports the repayment amount of a qualified reservist distribution, a qualified disaster distribution, or a qualified birth or adoption distribution.
- Box 14b reflects the code for the distribution type being repaid in box 14a. Applicable codes are as follows:
- “QR” for the repayment of a qualified reservist distribution
- “DD” for the repayment of a qualified disaster distribution, and
- “BA” for the repayment of a qualified birth or adoption distribution.
- Boxes 15a and 15b are used to report the FMV of “certain specified assets” held in an IRA. Specific box instructions are as follows:
- Box 15a: Enter the FMV of the investments in the IRA that are specified in the categories identified below.
- Box 15b: Enter the code for the type(s) of investments held in the IRA for which the FMV is reported in box 15a. A maximum of two codes can be entered in box 15b. If more than two codes apply, enter Code H.
- A–Stock or other ownership interest in a corporation that is not readily tradable on an established securities market.
- B–Short- or long-term debt obligation that is not traded on an established securities market.
- C–Ownership interest in a limited liability company or similar entity (unless the interest is traded on an established securities market).
- D–Real estate.
- E–Ownership interest in a partnership, trust, or similar entity (unless the interest is traded on an established securities market).
- F–Options contract or similar product that is not offered for trade on an established option exchange.
- G–Other asset that does not have a readily available FMV.
- H–More than two types of assets (listed in A through G) are held in this IRA.
- The account number box reports any unique number that the custodian/trustee assigns that will distinguish the specific account; an IRA custodian/trustee must provide an account number if it is filing more than one Form 5498 for an individual with multiple accounts/IRA plans; the IRS encourages use of the recipient's account number on paper forms if the financial organization uses the account number rather than the name or TIN for identification purposes.
Postponed contribution and late rollover contribution reporting–Boxes 13a, b, and c
Taxpayers in federally designated disaster areas may be granted additional time to file tax returns and make IRA contributions. These contributions can be reported on a Form 5498 for the year in which the contribution is made (e.g., made in 2023 for the 2022 tax year). Postponed contribution reporting is as follows:
- The contribution amount is shown in box 13a
- The tax year for which the contribution is made is shown in box 13b, and
- Use indicator code “FD” in box 13c.
Search for “tax relief in disaster situations” on the IRS website at www.irs.gov for specific disaster relief information.
Military personnel returning from overseas may be able to make contributions for previous years when they were out of the United States. For specific information on this type of postponed contribution, including the appropriate indicator codes for box 13c, see the Special reporting for U.S. Armed Forces in designated combat zones information included in the Instructions for Forms 1099-R and 5498.
Under IRS Revenue Procedure 2020-46, an IRA owner may be able to self-certify eligibility to complete a rollover after the 60-day period has expired. Report the amount of the late rollover in box 13a, leave box 13b blank, and use indicator code “SC” in box 13c.
Conclusion
As you can see, the IRA contribution reporting requirements are quite detailed. The Instructions for Forms 1099-R and 5498 is a great resource when trying to find answers to specific IRA reporting-related questions. Additionally, we will keep you informed of year-to-year reporting changes at https://www.wolterskluwer.com/en/expert-insights.
For an opportunity to learn more about IRAs and other tax-advantaged accounts including Health Savings Accounts and Coverdell Education Savings Accounts, consider the Wolters Kluwer IRA Library or on-demand video training offered on a variety of topics. Go here to learn more about training opportunities available to you, or you can call us at 1-800-552-9408.
