Trad IRA I can't get 5498 Tax form to prove basis

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
crazyhorse
Posts: 24
Joined: Sun Oct 24, 2010 3:32 pm

Trad IRA I can't get 5498 Tax form to prove basis

Post by crazyhorse »

Can I claim the $10,000 post tax IRA contributions when figuring my 2018 taxes on the RMD from a Traditional IRA if I don't have the 5498 forms. When I retired I moved and I only kept 10 years of tax records. From 1993-1997 I made post tax contributions of $2,000 per year to a traditional IRA. Now I have used the traditional IRA for my 2018 RMD. I do not have the 5498 forms from those years to prove that $10,000 is the cost basis of the IRA. This IRA has always been with Vanguard. Vanguard has informed me that they no longer provide tax forms prior to 1998. My question is should I go ahead and claim the $10,000 post tax IRA contributions when figuring my 2018 taxes on the RMD from this IRA since I don't have the 5498 forms from 1993-1997. Thanks.
HomeStretch
Posts: 4974
Joined: Thu Dec 27, 2018 3:06 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by HomeStretch »

Did you report the non-deductible traditional IRA contributions on Form 8606 with your federal return?
Topic Author
crazyhorse
Posts: 24
Joined: Sun Oct 24, 2010 3:32 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by crazyhorse »

I think so but I have no returns prior to 1998
codedude
Posts: 69
Joined: Thu Jan 26, 2017 9:15 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by codedude »

Can you try getting a copy of your return from the IRS?
Topic Author
crazyhorse
Posts: 24
Joined: Sun Oct 24, 2010 3:32 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by crazyhorse »

Well I suppose I could try to get 20 year old tax records but seems like a long shot and I'm sure would talk a while. I'm wondering if I should just claim the $10,000 cost basis and see what happens...
HomeStretch
Posts: 4974
Joined: Thu Dec 27, 2018 3:06 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by HomeStretch »

Aside from the 5498 question, I wasn’t clear from your post if you were also asking if you could deduct your total non-deductible contributions ($10,000) from a partial traditional IRA distribution (RMD). If you are asking, there is a pro-rata rule when determining how much of the RMD is taxable.
Topic Author
crazyhorse
Posts: 24
Joined: Sun Oct 24, 2010 3:32 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by crazyhorse »

I understand the pro rata (I think) I just want to know if this would be a red flag for an audit and if I did get audited is there an issue that I knew I didn't have the forms to back up the claim. I really DID contribute $10,000 post tax - I just can't prove it...
Spirit Rider
Posts: 13439
Joined: Fri Mar 02, 2007 2:39 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by Spirit Rider »

A tax return transcript is only available for the current tax year and returns processed during the prior three years.
tibbitts
Posts: 11852
Joined: Tue Feb 27, 2007 6:50 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by tibbitts »

I faced a similar situation a few years ago with an annuity, not an IRA. It dated back to the early 1990s. It's going to cost me - and maybe my beneficiary - many thousand of dollars over the coming years. Ultimately when you have funds moving multiple times between custodians over the course of a quarter of a century, and some of them no longer exist, it's impossible to prove whether the original source of the funds was post-tax - especially when the records that survived incorrectly recorded it as definitively pre-tax. All the income on the 1099 is marked "taxable", vs. "not determined" or something else, so I just grumble and pay the tax every year.
Spirit Rider
Posts: 13439
Joined: Fri Mar 02, 2007 2:39 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by Spirit Rider »

There is no requirement to proactively prove you made $10K in non-deductible contributions and filed the Form 8606s.

Personally, I would file a Form 8606 with $10K basis on Line 2 to report distributions pre-tax distributions in 2018. You are filing a good faith return to the best of your knowledge.

If the IRS responds and says our records show X, you will have to accept that as you have no proof to the contrary.
JW-Retired
Posts: 7184
Joined: Sun Dec 16, 2007 12:25 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by JW-Retired »

crazyhorse wrote: Sun Mar 10, 2019 9:11 pm I understand the pro rata (I think) I just want to know if this would be a red flag for an audit and if I did get audited is there an issue that I knew I didn't have the forms to back up the claim. I really DID contribute $10,000 post tax - I just can't prove it...
Did you make any non-deductible contributions and file 8606's subsequent to 1997? If you did and you can get those they should have the total basis up to that date........... assuming you did them correctly.
JW
Retired at Last
Topic Author
crazyhorse
Posts: 24
Joined: Sun Oct 24, 2010 3:32 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by crazyhorse »

no - only made post tax contributions 93-97. I think I will try the 'good faith' method. I also have a copy of a letter to a tax preparer made in 1998 (since I have taxes for that year). The letter was about my husbands Roth IRA conversion and it states that both of us contributed $10,000 post tax from 93-97. Only my husband converted to Roth though (long story). So there is that 'evidence'
JW-Retired
Posts: 7184
Joined: Sun Dec 16, 2007 12:25 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by JW-Retired »

crazyhorse wrote: Mon Mar 11, 2019 8:41 am no - only made post tax contributions 93-97. I think I will try the 'good faith' method. I also have a copy of a letter to a tax preparer made in 1998 (since I have taxes for that year). The letter was about my husbands Roth IRA conversion and it states that both of us contributed $10,000 post tax from 93-97. Only my husband converted to Roth though (long story). So there is that 'evidence'
That is definitely something on paper you can show for "evidence" if asked. I would give it a try it too. Good luck!
JW
Retired at Last
kaneohe
Posts: 6687
Joined: Mon Sep 22, 2008 12:38 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by kaneohe »

AFAIK the 5498 does not contain basis info since they are prepared by IRA custodian who has no idea what your tax situation is.

Do you have husband's tax return with Roth conversion in 1998? Does it show 10K basis on 8606? In combination w/ your reminder letter,
that might be sufficiently convincing.
Topic Author
crazyhorse
Posts: 24
Joined: Sun Oct 24, 2010 3:32 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by crazyhorse »

Yes I do have the 1998 tax return showing the $10,000 basis for his Roth conversion so I hope that is good enough. Thanks
FactualFran
Posts: 1138
Joined: Sat Feb 21, 2015 2:29 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by FactualFran »

crazyhorse wrote: Mon Mar 11, 2019 3:25 pm Yes I do have the 1998 tax return showing the $10,000 basis for his Roth conversion so I hope that is good enough. Thanks
The correct way for a tax return to have shown a $10,000 basis is on the Form 8606 included with the return. A letter from a tax preparer may not be sufficient.

What matters is not the basis of the IRA prior to 1998, but the remaining basis after the Roth Conversion done in 1998. If all of the traditional IRA was converted to a Roth IRA, then as of the end of 1998 the tradition IRA had a basis of zero.
MarkNYC
Posts: 1825
Joined: Mon May 05, 2008 7:58 pm

Re: Trad IRA I can't get 5498 Tax form to prove basis

Post by MarkNYC »

FactualFran wrote: Mon Mar 11, 2019 4:02 pm
crazyhorse wrote: Mon Mar 11, 2019 3:25 pm Yes I do have the 1998 tax return showing the $10,000 basis for his Roth conversion so I hope that is good enough. Thanks
The correct way for a tax return to have shown a $10,000 basis is on the Form 8606 included with the return. A letter from a tax preparer may not be sufficient.

What matters is not the basis of the IRA prior to 1998, but the remaining basis after the Roth Conversion done in 1998. If all of the traditional IRA was converted to a Roth IRA, then as of the end of 1998 the tradition IRA had a basis of zero.
The OP said she did not do a Roth conversion. Only her husband did a Roth conversion.
Post Reply