Understanding IRS Form 5498

Updated on May 24, 2021 - 10:30 AM by Admin, TaxBandits

If you are an IRA provider/issuer, you should be familiar with Form 5498. This form is filed by financial institutions that provide IRAs (Individual Retirement Accounts) to their participants. This article covers everything you need to know about Form 5498 for 2020.

In this article, we will cover the following topics:

1. What is IRS Form 5498?

The IRS Form 5498 exists so that financial institutions can report IRA information. This form should disclose IRA information, including catch-up contributions, Required Minimum Distributions (RMDs), and the Fair Market Value (FMV) of the account.

2. Who is required to file Form 5498?

Form 5498 needs to be completed and submitted to the IRS by the IRA trustees. IRA trustees can be banks, central banks, credit unions, investment banks, and other IRS-approved financial institutions. Each IRA holder will receive a copy of this return from the financial institution where they have an IRA.

Generally, an IRA combines all contributions and investments under one IRA plan. So you don’t have to file a separate Form 5498 for each investment under one plan. However, if participants have contributed to more than one IRA with the same issuer, a separate Form 5498 should be filed for each IRA plan.

3. What are the changes to Form 5498 for 2020?

There are only a few changes to Form 5498 for 2020. The changes are listed below:

  • The deadline to file Form 5498 for the tax year 2020 has been extended to June 30, 2021. Usually, the deadline falls on May 31 every year.
  • A new payment code, BA, has been introduced to report a qualified birth or adoption distribution repayment.
  • The RMD age has been increased from 70½ to 72 for the participants who attained 70½ after December 31, 2019.

4. What are the different kinds of IRAs?

There are four different types of IRAs, and they are mentioned in the section below:

  • Traditional IRA
  • Roth IRA
  • SEP IRA
  • SIMPLE IRA
  • Traditional IRA

    With a traditional IRA, contributions are tax-deductible. Therefore, the IRA holders don’t have to pay taxes for the contributions made. However, when withdrawing funds, taxes should be paid by participants. Much like ordinary income taxes.

    In addition, when participants reach the age of 72, they should start to withdraw amounts (i.e.) Required Minimum Distribution, from their IRA. Failure to do so may result in a 50% penalty of the Required Minimum Distribution.

  • Roth IRA

    Roth IRAs are accounts where contributions are not tax-deductible, whereas withdrawals are tax-free. Most importantly, there is no Required Minimum Distribution for a Roth IRA.

  • Simplified Individual Pension(SEP) IRA

    The SEP IRA is suitable for independent contractors and small business owners. This IRA follows the same withdrawal rules as the traditional IRA except it does not allow employees to make contributions.

  • Savings Incentive Match Plan for Employees (SIMPLE) IRA

    The SIMPLE IRA is exclusively available for small businesses and self-employed individuals. This IRA follows the same withdrawal rules as traditional IRA, and it allows both employees and employees to make contributions.

5. What information is reported on Form 5498?

The following information is reported on Form 5498:

  • Trustee’s name and address
  • Trustee’s TIN
  • Participant’s TIN
  • Participant name and address
  • Box 1 - IRA contributions
  • Box 2 - Rollover contributions
  • Box 3 - Roth IRA conversion amount
  • Box 4 - Recharacterized contributions
  • Box 5 - FMV of account
  • Box 6 - Life insurance cost included in box 1
  • Box 7 - Type of IRA (Checkbox)
  • Box 8 - SEP contributions
  • Box 9 - SIMPLE contributions
  • Box 10 - Roth IRA contributions
  • Box 11 - Check if RMD for 2021
  • Box 12a - RMD date
  • Box 12b - RMD amount
  • Box 13a - Postponed/late contrib.
  • Box 13b - Year
  • Box 13c - Code
  • Box 14a - Repayments
  • Box 14b - Code
  • Box 15a - FMV of certain specified assets
  • Box 15b - Code(s)

6. When is the deadline to file the Form 5498?

All of the Form 5498 deadlines for 2020 are listed in the section below.

Form 5498 Deadline
E-filing June 30, 2021 File Now
Paper Filing June 30, 2021
Recipient Copy: (Only for FMV & RMD) Feb 01, 2021
Recipient Copy: (Other types of IRAs) June 30, 2021

7. Filing Form 5498 with the IRS

TaxBandits is an IRS-authorized e-file provider supporting various tax forms, including Form 5498, 1099 series, 94x series, and ACA Forms.

Follow the steps below to file Form 5498 Electronically using TaxBandits:

  • Sign in to TaxBandits.

  • Click Start New Form >> Form 5498.

  • Select Tax Year.

  • Enter the Trustee, Participant, and IRA information.

  • Choose services for the order.

  • Pay & transmit your 5498 return to the IRS.

The IRS suggests filers to file Form 5498 electronically for quicker processing. Get started Now with TaxBandits and e-file your Form 5498!

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