What Is Form 5498 and Form 5498-SA, And Why Am I Receiving It Now?

On May 22, 2023 I received an email from Charles Schwab. It was titled in all caps, “IMPORTANT TAX RETURN DOCUMENT AVAILABLE – Form 5498,” and I got a similar one for Form 5498-SA. I’m sure many reading this blog received, or will receive, a similar message in the coming days. 

Don’t worry — you didn’t fail to provide your tax accountant with an “important” document for your recent income tax return filing. Here’s what you need to know about Form 5498 and Form 5498-SA, and what to do if you received them.

What Is Form 5498?

The IRS Form 5498 is a document used by financial institutions to report contributions made to an Individual Retirement Account (IRA). 

The form provides information on the type of IRA account, contributions made to the account, and any rollovers or conversions that occurred during the most recent completed tax year (2022).

Why Am I Receiving Form 5498 Now?

Form 5498 is typically issued to IRA owners and beneficiaries by the end of May each year. All custodians including Charles Schwab, Edward Jones, and Fidelity, among others, send this document well after tax season has ended.

The form is also filed with the IRS at the same time. The information on Form 5498 is used by the IRS to verify that contributions made to an IRA are within the contribution limits set by the government.

What Is Covered On Form 5498?

Form 5498 is divided into several sections, including the type of IRA account, contributions made during the tax year, and any rollovers or conversions that occurred. 

The contributions section provides a breakdown of the total contributions made to the account, including any contributions made by the account holder or a spouse, as well as any catch-up contributions made by individuals aged 50 or older.

The rollover and conversion section provides information on any transfers made from another retirement account, such as a 401(k), as well as any conversions from a traditional IRA to a Roth IRA. This information is important for calculating the tax consequences of these transactions.

What Is Form 5498-SA?

The IRS Form 5498-SA is a document used by financial institutions to report contributions made to a Health Savings Account (HSA). 

The form provides information on the type of HSA account, contributions made to the account, and any rollovers that occurred during the most recent completed tax year (2022).

Why Am I Receiving Form 5498-SA Now?

Similar to contributions to an IRA, HSA contributions are allowed up until the tax filing deadline. That means Form 5498-SA can’t be sent until after the tax filing deadline. Form 5498-SA is typically issued to HSA owners and beneficiaries by the end of May each year.

The form is also filed with the IRS at the same time. The information on Form 5498-SA is used by the IRS to verify that contributions made to an HSA are within the contribution limits set by the government.

What Is Covered On Form 5498-SA?

Form 5498-SA is divided into several sections, including the type of HSA account, contributions made during the tax year and any rollovers that occurred.

The form provides a breakdown of the total contributions made to the account, as well as any rollover contributions from an old HSA into a new one.

What Do I Need To Do With Form 5498 and Form 5498-SA?

It is important for IRA owners to review their Form 5498 and Form 5498-SA each year to ensure that the information is accurate. If there are any errors or discrepancies, the account holder should contact their financial institution to have the information corrected.

It would be best practice to send your Form 5498 or 5498-SA to your tax accountant to ensure they appropriately captured everything. For a good tax accountant who did proper data gathering during tax season, this document confirms everything that they already completed for your most recently filed tax return.

If you have any questions about Form 5498 or Form 5498-SA, your Market Street financial advisor is here to help. We can work with your tax accountant to address any concerns you may have.