Normally, Anatomy 5498 is mailed to IRA owners in May, not January. IRA contributions can be fabricated afterwards the agenda year – taxpayers can accord to their IRAs for the 2016 tax year up to April 18, 2017 – appropriately the May date.
And normally, the anatomy is allowable by the IRS to be provided to IRA owners aback they booty assertive IRA actions, such as authoritative a addition or accomplishing a rollover during the tax year.
Getting aback to Joe, he racked his academician on whether he had abandoned a addition he had fabricated in 2016. He could not recall, but he didn’t anticipate so.
He looked at the anatomy added closely.
At the top, he saw “2016 Anatomy 5498 IRA Addition Information.” At the centermost of the form, he saw “2016 IRA Addition Information: This advice is actuality furnished to the Internal Revenue Service.”
He glanced at the numbers printed in the box: $21,733 jumped out. Whoa. That’s added than addition Joe’s age can accord to an IRA. The best for 2016 is $5,500 for addition beneath age 50 ($6,500 for age 50 and up).
Next was a box absolute his annual cardinal and “5. Fair bazaar amount of annual ($21,733); 7. IRA Blazon (IRA) and 11. Required Minimum Distribution for 2017” (followed by a box that was not arrested off).
Wait. Fair bazaar value. That’s not a contribution.
Below was addition box, blue-blooded “IRA Portfolio as of December 31, 2016 (not appear to IRS),” advertisement the backing in Joe’s IRA. At the basal was a box blue-blooded “IRA almsman Summary Statement as of December 31, 2016 (not appear to the IRS),” advertisement the names of Joe’s beneficiaries.
On the aback of the anatomy was this notice: “If you accomplish any IRA contributions for 2016 amid January 1, 2017 and April 18, 2017, you will be mailed an adapted Anatomy 5498 by May 31, 2017.”
Joe alleged his banking academy and asked why he was beatific the form. Was this an error? The acknowledgment from the buzz adumbrative was that no tax was due and no “contribution” was actuality appear to the IRS, aloof the amount of the account.
It happens that banking institutions accommodate the advice that Joe accustomed on his Anatomy 5498 to the IRS, usually electronically. The institutions chase IRS instructions: “File Anatomy 5498, IRA Addition Information, with the IRS by May 31, 2017, for anniversary being for whom in 2016 you maintained any alone retirement adjustment (IRA).” That agency the IRS will accept advice from the academy about your IRA.
If addition does not accord to his or her IRA during the tax year, the IRS instructs institutions that alone boxes 5 (market value) and 7 (type of IRA) charge be completed, and, if applicable, box 11 (RMDs) and a few others.
In my calls to two banking institutions about their practices, I asked whether they mailed Anatomy 5498 to all IRA owners. One academy said no. Joe’s academy said yes.
If you accept a Anatomy 5498 that triggers abhorrence of an abrupt tax accountability or an balance contribution, booty a afterpiece attending at the form. Is it aloof advertisement a value?
By the way, Box 1 is area you would acquisition contributions. Box 2 is for rollovers. Box 3 is for Roth about-face amounts. Box 4 is for recharacterized contributions. Box 5 is fair bazaar value, as we’ve discussed. Box 6 has to do with activity allowance award contracts. Box 7 identifies the blazon of IRA.
To analysis the instructions for Anatomy 5498, go to http://tinyurl.com/h6979lz.
Julie Jason, JD, LLM, a claimed money administrator at Jackson, Grant of Stamford, Conn., and award-winning author, welcomes questions and comments to [email protected]
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