Tax Form 5498: What is it and how does it work?
If you are save for retirement with an individual -retirement- formula, you receive Form 5498 annually.
Your Individual Retirement Account must declare your contribution to the IRS during the tax year.
There are several retirement accounts. However, depending on your IRA You might need Form 5498 report your contributions.
What contributions does Form 5498 report?
According to Turbotax, “the rollover or conversion of assets from a retirement plan to an IRA is not deductible.”
However, they are considered contributions and must be declared Form 5498.
-The amount you have contributed to a traditional IRA.
-Amounts contributed to an Employee Savings Incentive Plan (SIMPLE) IRA.
-Amounts you put into a Roth IRA.
What transfers are not reported on Form 5498?
– A traditional IRA to another traditional IRA or a SEP IRA,
-A SIMPLE IRA to another SIMPLE IRA,
-A SEP IRA to another SEP IRA or a Traditional IRA
-A Roth IRA to another Roth IRA.
Turbotax also mentions that direct trustee-to-trustee transfers are generally not reported on Form 5498.
Can I deduct my contributions?
Depending on your eligibility, you can deduct your contributions to a traditional IRA.
when you start make withdrawalsyou must declare the exact amounts as income on your tax returns.
All the limits of possible deductions appears in box 1 of form 5498.
Every year there is a new maximum contribution amount subject to the taxpayers required by law.
However, depending on your workplace pension plan and your spouse’s contributions to another IRA account, you may not be eligible for take a full deduction.