What Is 2021 Form 5498 and What Do I Do With It?
Understand Form 5498, the informational summary of your 2021 IRA contributions and value. Learn why it's a vital record for verifying your tax details.
If you have an Individual Retirement Arrangement (IRA), you will receive Form 5498, “IRA Contribution Information.” This document is sent by the financial institution that manages your retirement account. It serves as an official record for both you and the Internal Revenue Service (IRS), detailing contributions or other activities within your IRA for a tax year. You do not need to file this form with your income tax return; it is for informational purposes.
A detail about the 2021 Form 5498 is its delivery timeline. Since taxpayers can make contributions for the 2021 tax year up until the tax filing deadline of April 18, 2022, the form is not sent until after this date. Financial institutions are required to mail Form 5498 to account holders by May 31, 2022. This timing ensures that all relevant activity for the 2021 tax year is accurately captured.
Understanding the Information on Form 5498
Form 5498 provides a summary of funds that moved into your IRA for the tax year. Box 1 shows the total contributions you made to a traditional IRA for 2021, including any amounts contributed up to the April 18, 2022, deadline. Box 10 reports the total contributions made to a Roth IRA for 2021 under the same timeframe.
Other boxes detail contributions to employer-sponsored retirement plans. Box 8 shows contributions made to a Simplified Employee Pension (SEP) IRA. Box 9 reports contributions to a Savings Incentive Match Plan for Employees (SIMPLE) IRA.
The form also tracks the movement of existing retirement funds. Box 2, “Rollover contributions,” lists any funds you moved from another retirement account, such as a 401(k), into your IRA during 2021. Box 3, “Roth IRA conversion amount,” shows money moved from a traditional, SEP, or SIMPLE IRA into a Roth IRA, an action that has tax implications and must be reported on Form 8606.
Two other pieces of information are the account’s value and future requirements. Box 5 reports the Fair Market Value (FMV) of your IRA as of December 31, 2021. Box 11 is a checkbox that, if marked, indicates that you are required to take a Required Minimum Distribution (RMD) from that account for the following year, 2022.
How to Use Form 5498
Upon receiving Form 5498, your primary action is to verify the information it contains. You should compare the figures listed in the contribution and rollover boxes with your own financial records, such as bank statements or payroll stubs. Ensuring these numbers are correct is important because the IRS receives an identical copy.
After verifying its accuracy, you must keep Form 5498 for your records as official proof of your IRA contributions. This is particularly relevant for non-deductible contributions to a traditional IRA, as the form helps establish your cost basis. This basis is needed to correctly calculate taxes on withdrawals in retirement.
The form also provides a clear record of rollover transactions. Keeping Form 5498 helps you prove that funds moved from a previous employer’s plan were properly deposited into an IRA, substantiating that the transaction was a tax-free rollover.
Correcting Errors on Your Form 5498
If you find a discrepancy on your Form 5498, contact the financial institution that issued it. Explain the error, such as an incorrect contribution amount, so the institution can investigate. If an error is confirmed, they are responsible for issuing a corrected form.
A corrected form will have the “CORRECTED” box checked at the top, signaling to you and the IRS that it supersedes the original. Retain this corrected copy with your tax records.
If an error on the original form caused you to report incorrect information on a filed tax return, you may need to file an amended return using Form 1040-X. For example, if the form understated your deductible contributions, an amended return allows you to claim the proper deduction and receive a refund.