Wednesday, June 10, 2009

Form 5498

Time to get technical...

Individuals who did certain transactions in their IRAs last year have now received their Form 5498 from the IRA custodian. These forms are informational only, but IRS also gets a copy. You need to check these forms for accuracy.

IF YOU MADE A CONTRIBUTION TO AN IRA, DID A 60-DAY ROLLOVER OF FUNDS FROM ONE RETIREMENT PLAN TO ANOTHER, DID A CONVERSION TO A ROTH IRA, OR DID A RECHARACTERIZATION, YOU SHOULD RECEIVE A FORM. I emphasize that because there are so many instances of IRA funds going into the wrong account or instructions on transfers not being followed correctly. Those errors need to be fixed as soon as possible.

If you did one of these transactions in 2008 and did not receive a Form 5498 (some custodians do send them out at the beginning of the year), call your custodian or your financial advisor. Check up on your transaction and make sure it was done and that the funds have gone into the correct type of account. If you have received a form, check to be sure the amounts listed on the form are correct. Make sure the information is in the right box, i.e. if it is a Roth transaction it is in a Roth box. Most of you, like me, will find no mistakes on your forms.

--By IRA Technical Consultant Beverly DeVeny and Jared Trexler
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*Copyright 2009 Ed Slott and Company, LLC


Anonymous said...

Could you comment on placing rental properties inside a Charitable Remainder Trust and use the charitable deduction to offset the income taxes when doing a Roth conversion. Can you think of any pitfalls in doing this ? Thank-you, Jim