Written By: Ian Robertson
Key Points
- Form 5498 reports any contributions made to your account during the tax year and the fair market value (FMV) of your Self-Directed IRA.
- It is considered best practice for retirement account holders to keep accurate records of the value of the assets in their retirement account.
- Madison Trust files Form 5498 for its account holders and is here to answer your questions about the reporting requirements for your Self-Directed IRA.
As tax season is in full swing, we often receive questions regarding tax forms for your Self-Directed IRA (SDIRA). Form 5498 is one of the primary tax documents that generally should be on your radar as a Self-Directed IRA account holder. Let’s break down what Form 5498 is, how to file, and how it may affect your retirement planning.
What Is Form 5498?
Form 5498 is a form for informational purposes only. It reports any contributions made to your account during the tax year. This includes annual contributions, rollovers, conversion, and recharacterizations. Form 5498 also notes the fair market value (FMV) of your account as of December 31. This form also informs the IRS which individuals must take RMDs during the year.
Who Files Form 5498?
Your SDIRA custodian solely files Form 5498, not the SDIRA account holder. You may receive IRS Form 5498, as a copy for your records. It is not necessary to file in your tax return.
When Is the Deadline for IRS Form 5498?
Since contributions for the previous tax year can be made until April 15 of the current year, Form 5498 must be submitted to the IRS by the SDIRA custodian by May 31. It is also typically issued to account owners by May 31. For example, if you contribute $7,000 to your SDIRA for 2024, your custodian must send your 5498 to the IRS by May 31, 2025.
Some SDIRA custodians may choose not to send account holders this form if there are no new contributions to the account. Even if the IRA holder does not receive Form 5498, the IRS will still receive a copy confirming your contribution.
This form is only generated if there is reportable activity like a contribution or rollover. If there is no reportable activity, the FMV is reported on your year-end statement and to the IRS.
If you have completed an indirect rollover within the 60-day window, Form 5498 will serve as confirmation that the rollover has occurred.
Key Information Reported on Form 5498
IRA Contributions – the form includes details on regular contributions, rollover contributions, and recharacterizations made during the tax year.
- This includes all contributions made to your Self-Directed Traditional IRA, Self-Directed Roth IRA, Self-Directed SEP IRA, or Self-Directed SIMPLE IRA
- Reports any rollovers you completed during the year
- Details any recharacterizations of contributions between different IRA types
Fair Market Value (FMV) - the total value of the IRA as of December 31 of the reporting year. This information helps ensure that required minimum distributions (RMDs) are calculated correctly for applicable accounts.
Required Minimum Distributions (RMDs): This form may indicate if an RMD is required for the following year, though you are responsible for taking them. If you are age 73 and over and contributed to a Self-Directed Traditional IRA, you are responsible to take RMDs.
Where To Look on the Form
For Self-Directed Traditional IRA account holders, the total value of annual contributions is reported in Box 1 of Form 5498. For Self-Directed Roth IRA account holders, the amount is reported in Box 10.
Why Is Form 5498 Important for Self-Directed IRA Account Holders?
While you do not file Form 5498 (your Self-Directed IRA custodian does), it is essential to understand its contents for several reasons:
- Verifying Your IRA Contributions: Use the form to verify that your contributions were accurately reported to the IRS. This helps ensure you're taking the correct deductions or credits.
- Tracking Your IRA’s Value: The FMV information is vital for tracking the growth of your retirement savings. Especially with Self-Directed IRA's or Self-Directed Checkbook IRAs that can contain alternative investments, like real estate, precious metals, or private equity, the valuation of the assets may need to be confirmed by the account holder.
- Planning Your RMDs: While you're responsible for tracking your RMDs, the form can serve as a reminder.
- Keeping Record of Your Account’s Activity: Keep a copy of Form 5498 for your records, as it provides a comprehensive overview of your IRA activity.
How To Access Form 5498 at Madison Trust
Madison Trust will mail you a copy of Form 5498 by May 31 of the following year. They are also available under Documents > IRS Forms in our client portal.
Everything You Need To Know About Form 5498
Conclusion: Let's Tie It All Up
As a retirement account holder, it is important to understand Form 5498 so you can gain control of your retirement savings and ensure accurate reporting of the contributions and value of your account. Staying informed and organized is considered best practice to navigate the complexities of Self-Directed IRAs with confidence.
Have Questions? We Have Answers!
Schedule a call with a Self-Directed IRA Specialist today to get your questions answered.
