I received a Form 5498 for a small IRA I have. Everything is zero on the form, accept the Fair Market Value (FMV) of the account, which is $7484. I have made NO contributions or distributions in 2023. Do I still need to file this with my taxes, since there was no activity? Thanks.
Form 5498 is never used to file your taxes. It’s a notification to both you and the IRS of what’s in the IRA as of Dec 31 of the prior tax year, and any/all activity that occurred in the IRA for the prior tax year. It usually isn’t sent out until after April 15 because contributions for the prior tax year are allowed until then. It is required to be sent out by May 31.
I will say, if this is a Traditional IRA, you are getting close to RMD age and you want to cut down on paperwork and hassle, you may want to combine this IRA and any other Traditional IRAs you own into a single account. That’s because, while the IRS allows you to withdraw your RMD from any one of your IRA accounts, the individual custodians of your IRA accounts don’t know that you have taken your full RMD from another account, and will be pushing you to take the RMD amount out the IRA account they supervise. Depending on the custodial agreement that you have with them, they may even send it out automatically in December unless you have specifically told them not to. Therefore, it’s easier to have all of your Traditional accounts at a single custodian once you reach RMD age.
AJ
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Yes, every year you report the Dec 31 value of the account. This figure is used to calculate your RMD when you reach age 72. But until then no taxes are due when you take no distributions.
No, this is wrong. The companies report the FMV but individuals do not need to. (Read aj’s response.)
On mine it goes on line 6 of Form 8606.
Which appears to be only needed for specific situations.
Use Form 8606 to report:
Nondeductible contributions you made to traditional IRAs.
Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs.
Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs.
Distributions from Roth IRAs.
OK. So I think we have determined that MY IRA had no activitty, no contributions, and no distributions, and no interest paid… So, I do not need form 8606. …As a side question… I have another IRA in my etrade account and it HAS PAID interest. So, that would end up on Form 8606, because it paid interest? Thanks.
As a side note – It appears etrade 1099’s for my IRA’s are not available… Are they not available until after April 15th? Since people have until then to make a contribution? So… If I had no activity on ANY of my IRA’s, and the 1099’s are not yet available, can I just file my taxes without that info?? What the heck do people do if the 1099’s are not available until after April 15th, and I want to file my income tax before April 15th. Geez…
No, this is not correct. The IRA custodian does this for you, through using Form 5498. You can use Form 5498 to figure what your RMD will be, but you don’t need to report it.
AJ
Form 8606 is required every year if you ever made non-deductible contributions to a Traditional IRA, to continue to track the basis (non-deductible contributions) in the account, and then when you take distributions from a Traditional IRA with basis - so you don’t get taxed again on the basis.
Form 8606 is also required if you do conversions from a Roth IRA to a Traditional IRA, and if you take distributions from a Roth IRA.
1099-Rs document distributions from IRAs, including rollovers. If you did not take any distributions from your IRAs, or roll any of them over, you won’t be getting a 1099-R
No, 1099-Rs should be sent out by Jan 31. But you won’t get one if you didn’t take any distributions.
I will point out that you should be taking distributions if you have reached your RMD age. You have reached your RMD age when you turn:
70 1/2 before Dec 31, 2019
72 between Jan 1, 2020 and Dec 31, 2022
73 between Jan 1, 2024 and Dec 31, 2032
75 on or after Jan 1, 2033
You will note that those who turned 73 in 2023 also turned 72 in 2022, so they are subject to the age 72 requirement, which is why I excluded the year 2023 from the age 73 requirement.
AJ
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AJ. Thanks for the info. As always, I really appreciate your sage advice. And everyone else’s sage advice in this group!
Unfortunately you file your return on or before April 15th because you are a law abiding citizin and then you file an amended return until the jack leg that didn’t know how to do his job (and is later promoted to VP) finally gets around to sending you a 1099.
Who gets penalized? Not the jack leg. You do.
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When you file your tax return, you need to account for any and all income that you received for that year, even if you don’t get a 1099 for it. Or you can file an extension, paying the maximum amount that you may owe, and then get a refund when you file after the 1099 is issued.
Not exactly. If, when you file your return or the extension request, you don’t pay the maximum amount you may owe on the income that the 1099 will document, yes, you may be penalized. However, the IRS also penalizes those who are supposed to generate 1099s if they issue them late or incorrectly. Have you reported the issue to the IRS?
AJ
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No. I just sold the REIT that due to their ineptedness caused me to file an ammended return three (3) years in a row. Why should I spend extra time with the IRS because of the deficencies at the REIT? Done deal. I can go on with my life.
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See, that’s the thing about REITs - they often have to wait to get 1099s from their investments before they can issue 1099s to their investors. That often results in either late issuance of the 1099 or a corrected 1099. It’s a known problem when investing in REITs. To avoid a penalty, the REIT investor can assume that the amount received from the REIT for the prior year was all ordinary income, and then if some of it ends up being return of capital (non-dividend payment), long-term capital gain or some other type of income that’s taxed at a lower rate, they would get a refund when they file the amended return. But filing amended returns when you own REITs is a feature, not a bug.
AJ
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Yes! Those REITS are a pain for sure! I owned a foreign REIT for a while. It took more time filing the taxes, than it was worth. I finally got rid of it.
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I will point out that another type of investment that often results in having to file amended returns is MLPs. In addition, MLPs can make you file multiple state returns if they attribute the income you received to multiple states - as can often happen with oil & gas associated MLPs.
AJ
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