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Understanding Form 5498: Why It Arrives in May, Not April

February 15, 2024

Demystifying the Timing of Form 5498

๐Ÿ—“๏ธ Form 5498 often perplexes IRA holders with its May arrival, well after the April tax deadline. Why does this happen, and what does it mean for you?

๐Ÿ•ต๏ธ The May Mystery of Form 5498

  1. Extended Contribution Window: Unlike other tax forms, IRA contributions for a given tax year can be made up until the tax filing deadline in April of the next calendar year. This extended window means the custodian where the account is held needs time to finalize the contribution details, which means it can't be sent out until after the tax filing deadline in April.
  2. No Impact on Tax Filing: Since Form 5498 reports contributions, not tax deductions (like a W-2 or 1099), it doesn't impact your tax return filing.
  3. Post-Filing Relevance: Its purpose is to serve more as a confirmation of what you’ve already reported (or should have reported) in your tax return.

๐Ÿฆ Why It Matters

  1. For Accurate Record-Keeping: Ensures you haven't exceeded contribution limits.
  2. Future Planning: Useful for planning next year's contributions and tax strategies.
  3. Roth IRA Conversions and RMDs: Critical for those who converted to a Roth IRA or are taking Required Minimum Distributions (RMDs).

๐Ÿ” Key Takeaways

  • Timing is By Design: Its arrival in May is intentional, allowing for the complete capture of all contributions.
  • Review, Don’t Rush: Use it to verify your IRA contributions, but there's no need to wait for it to file taxes. 
  • Plan Ahead: Leverage this information for IRA strategy planning in the future.

๐Ÿ“Œ Action Steps:

Aren't sure if you are waiting on a 5498? Review your yearend statement for contributions and withdrawals for a running record of details made in that calendar year.

Keep an eye out for Form 5498 in May. When it arrives, review it carefully and file it with your financial documents. Use it as a tool to ensure your IRA is on track and aligns with your future financial goals.

For business retirement plans, such as SEP IRAs, etc., be sure to track on your side or with your tax professional to ensure you know which contribution is deducted for which calendar year since there are extended windows for adjustments to business retirement plans. 

๐ŸŽฏ Need more guidance on navigating your IRA or financial planning? Let’s connect and simplify your financial journey together! ๐Ÿš€

 Emily A. Secord, CFP®   

Certified Financial Planner

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