Vanguard IRS Form 5498 error

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sleepysurf
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Vanguard IRS Form 5498 error

Post by sleepysurf » Fri May 17, 2019 12:08 pm

I received my 2018 Form 5498 from Vanguard the other day. It was completely wrong, reporting (most) of my Roth Conversion for the year as a Rollover IRA Contribution. I called Vanguard, and one of their Flagship Reps reviewed it, agreeing they somehow made a mistake. She reassured me that it hadn't yet been sent to the IRS, and would be corrected within a few days. This was the 2nd time within a year that I found errors in their reporting (previous issue with erroneous cost-basis).

For those that just received their Form 5498, I suggest looking over it closely. Not sure if this is a system wide problem, or just a one-off mistake.
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Re: Vanguard IRS Form 5498 error

Post by megabad » Fri May 17, 2019 1:00 pm

sleepysurf wrote:
Fri May 17, 2019 12:08 pm
She reassured me that it hadn't yet been sent to the IRS, and would be corrected within a few days.

For those that just received their Form 5498, I suggest looking over it closely. Not sure if this is a system wide problem, or just a one-off mistake.
If you see an error, I would certainly urge haste. These will be sent to the IRS very shortly if they haven't already. The due date is almost here.

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Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 10:26 am

[Thread merged into here, see below. --admin LadyGeek]

Hello Bogleheads,

I was just looking over my 2018 Form 5498 that I downloaded from Vanguard's website a few weeks ago.

I just realized that box 5* shows 0.00.

Of course, my Roth IRA did not have a balance of 0.00 on 12/31/2018.

In prior years, box 5 of Form 5498 has always shown my end-of-year balance.

The only explanation that I can think of is that in 2018, per Vanguards request, I transitioned from a mutual-fund-only account to a brokerage account. However, it still seems odd to me for 0.00 to show up in box 5, since I did have a balance in my Roth IRA.

Has this happened to other people who have transitioned to a brokerage account? Is this normal? Will this cause any problems for me?

*FMV of account (Year end - 12/31/2018) (Box 5)

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 12:57 pm

Can someone who has also transitioned from a mutual-fund-only account to a brokerage account check to see what their Form 5498 shows?

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by livesoft » Sun Jun 02, 2019 1:08 pm

Maybe you have two 5498s?
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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by dodecahedron » Sun Jun 02, 2019 1:08 pm

Silence Dogood wrote:
Sun Jun 02, 2019 12:57 pm
Can someone who has also transitioned from a mutual-fund-only account to a brokerage account check to see what their Form 5498 shows?
I transitioned a few years ago (not sure exactly which year) but I looked back at all my prior year Vanguard 5498 forms and nothing looks amiss.

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 1:13 pm

livesoft wrote:
Sun Jun 02, 2019 1:08 pm
Maybe you have two 5498s?
I was thinking that might be the case, but it's already June, and I only see one Form 5498 on the Vanguard website for tax year 2018.

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 1:13 pm

dodecahedron wrote:
Sun Jun 02, 2019 1:08 pm
I transitioned a few years ago (not sure exactly which year) but I looked back at all my prior year Vanguard 5498 forms and nothing looks amiss.
Thank you for checking.

So just to be clear, you have an amount in box 5 other than 0.00?

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by sleepysurf » Sun Jun 02, 2019 1:15 pm

I recently posted about errors with my 2018 Form 5498 (viewtopic.php?f=1&t=281326). Perhaps the Moderator can merge these two threads.

Of note, I had also transitioned my Rollover IRA from a Mutual Fund to Brokerage account, and had also done a Roth conversion. Vanguard corrected the error for the Brokerage account, but left the error intact in the Mutual Fund account version. I spoke with a Flagship Rep Friday, who said he'd have their Tax team review both account forms again.

The Vanguard Rep told me they "batch" submit the 5498 forms to the IRS, and he didn't think that was done yet. However, some other online sources state that May 31st is the deadline for submission to the IRS. I'm waiting to hear back from Vanguard tomorrow.
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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 1:24 pm

sleepysurf wrote:
Sun Jun 02, 2019 1:15 pm
I recently posted about errors with my 2018 Form 5498 (viewtopic.php?f=1&t=281326). Perhaps the Moderator can merge these two threads.

Of note, I had also transitioned my Rollover IRA from a Mutual Fund to Brokerage account, and had also done a Roth conversion. Vanguard corrected the error for the Brokerage account, but left the error intact in the Mutual Fund account version. I spoke with a Flagship Rep Friday, who said he'd have their Tax team review both account forms again.

The Vanguard Rep told me they "batch" submit the 5498 forms to the IRS, and he didn't think that was done yet. However, some other online sources state that May 31st is the deadline for submission to the IRS. I'm waiting to hear back from Vanguard tomorrow.
Fortunately, Vanguard did report my 2018 Roth IRA contribution correctly ($5,500 shown in box 10), so I don't think that it's the same error (in nature) that resulted in the mistakes on your Form 5498.

You mention a brokerage and mutual fund version of Form 5498. Did you receive two versions of Form 5498 for 2018? Did you transition from a mutual-fund-only account to a brokerage account last year?

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by LadyGeek » Sun Jun 02, 2019 1:35 pm

sleepysurf wrote:
Sun Jun 02, 2019 1:15 pm
I recently posted about errors with my 2018 Form 5498 (viewtopic.php?f=1&t=281326). Perhaps the Moderator can merge these two threads...
I merged Silence Dogood's thread into sleepysurf's thread - it's a similar discussion.

The combined thread is now in the Personal Finance (Not Investing) forum (IRA form).

(To get our attention sooner, report the post using the ! in the top-right corner of the post. One of the reasons is "Duplicate thread". Thanks to the member who did just that.)
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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by sleepysurf » Sun Jun 02, 2019 1:36 pm

Silence Dogood wrote:
Sun Jun 02, 2019 1:24 pm
...You mention a brokerage and mutual fund version of Form 5498. Did you receive two versions of Form 5498 for 2018? Did you transition from a mutual-fund-only account to a brokerage account last year?
I only received a 5498 for my IRA Brokerage account in the mail, but there are THREE versions online (original IRA Mutual Fund account, IRA Brokerage account, and Roth Brokerage account). In my case, the FMV's (box 5) were all correct, but my Roth conversion amount was wrong.
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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 1:52 pm

sleepysurf wrote:
Sun Jun 02, 2019 1:36 pm
Silence Dogood wrote:
Sun Jun 02, 2019 1:24 pm
...You mention a brokerage and mutual fund version of Form 5498. Did you receive two versions of Form 5498 for 2018? Did you transition from a mutual-fund-only account to a brokerage account last year?
I only received a 5498 for my IRA Brokerage account in the mail, but there are THREE versions online (original IRA Mutual Fund account, IRA Brokerage account, and Roth Brokerage account). In my case, the FMV's (box 5) were all correct, but my Roth conversion amount was wrong.
I'm sorry you've had to deal with this nuisance.

I think the most important question for me is what livesoft asked above, whether I (should have) received two Form 5498s.

Did box 5 of your original IRA mutual fund account Form 5498 show 0?

In my case, I contributed $5,500 to my Roth IRA on January 2, 2018 and transitioned to the brokerage account in late March/early April 2018 (not sure which date is the official transition date). I only have a Roth IRA with Vanguard and I'm 100% invested in the Vanguard Target Retirement 2055 fund.
Last edited by Silence Dogood on Tue Jun 04, 2019 10:56 am, edited 1 time in total.

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Re: Vanguard IRS Form 5498 error

Post by Silence Dogood » Sun Jun 02, 2019 1:55 pm

It is often recommended to keep a copy of each Form 5498 indefinitely.

I can imagine my future self being confused by seeing 0 reported in box 5.

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Re: Vanguard IRS Form 5498 error

Post by cherijoh » Sun Jun 02, 2019 1:58 pm

sleepysurf wrote:
Fri May 17, 2019 12:08 pm
I received my 2018 Form 5498 from Vanguard the other day. It was completely wrong, reporting (most) of my Roth Conversion for the year as a Rollover IRA Contribution. I called Vanguard, and one of their Flagship Reps reviewed it, agreeing they somehow made a mistake. She reassured me that it hadn't yet been sent to the IRS, and would be corrected within a few days. This was the 2nd time within a year that I found errors in their reporting (previous issue with erroneous cost-basis).

For those that just received their Form 5498, I suggest looking over it closely. Not sure if this is a system wide problem, or just a one-off mistake.
VG properly recorded my Roth Conversions as conversions, so I don't think it is a system-wide issue.

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by dodecahedron » Sun Jun 02, 2019 5:42 pm

Silence Dogood wrote:
Sun Jun 02, 2019 1:13 pm
dodecahedron wrote:
Sun Jun 02, 2019 1:08 pm
I transitioned a few years ago (not sure exactly which year) but I looked back at all my prior year Vanguard 5498 forms and nothing looks amiss.
Thank you for checking.

So just to be clear, you have an amount in box 5 other than 0.00?
Yes. There are non-zero amounts in box 5 in all years.

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 9:09 pm

dodecahedron wrote:
Sun Jun 02, 2019 5:42 pm
Yes. There are non-zero amounts in box 5 in all years.
Thank you for your time.

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Sun Jun 02, 2019 9:22 pm

livesoft wrote:
Sun Jun 02, 2019 1:08 pm
Maybe you have two 5498s?
The more that I think about it, the more that I think I should have two Form 5498s.

I think the one I have is accurate, but only for the mutual-fund-only account. It shows that I contributed $5,500 (which I did prior to the transition) and it shows that there is now a $0 balance (since technically the mutual-fund-only account is now closed).

However, I think I should have a second Form 5498 that shows an amount in box 5 (the year end value of my Roth IRA) with everything else showing zero.

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by cas » Mon Jun 03, 2019 6:00 am

Silence Dogood wrote:
Sun Jun 02, 2019 9:22 pm
livesoft wrote:
Sun Jun 02, 2019 1:08 pm
Maybe you have two 5498s?
The more that I think about it, the more that I think I should have two Form 5498s.

I think the one I have is accurate, but only for the mutual-fund-only account. It shows that I contributed $5,500 (which I did prior to the transition) and it shows that there is now a $0 balance (since technically the mutual-fund-only account is now closed).

However, I think I should have a second Form 5498 that shows an amount in box 5 (the year end value of my Roth IRA) with everything else showing zero.
From a lay reading of the Form 5498 instructions (I am not an expert), the instructions (to the custodian) for Form 5498 seem to say that you should get a different Form 5498 for the mutual fund and brokerage IRA accounts, *but only if* some sort of transaction that is required to be reported to the IRS happened in that account. From my reading, a contribution to to an account would require a Form 5498 to be generated, but it kinda looks like a "conversion" (internal trustee-to-trustee transfer?) from a mutual fund account to a brokerage account would not be an action that would cause a Form 5498 to be generated.

*If* that is the case, the Form 5498 instructions seem to say that it was correct that Vanguard generated a 5498 for the mutual fund account (which received the contribution) but not for the brokerage account (which received what might have been classified as a trustee-to-trustee internal transfer?)

Probably best to read the instructions yourself (starts page 18 in link below) and/or talk to Vanguard about it, then decide whether you think any action happened on the brokerage account that should have caused a Form 5498 to be generated.

https://www.irs.gov/pub/irs-pdf/i1099r.pdf

(And a couple of excerpts that might be relevant...)
An IRA includes all investments under one IRA plan. It
is not necessary to file a Form 5498 for each investment
under one plan. For example, if a participant has three
certificates of deposit (CDs) under one IRA plan, only one
Form 5498 is required for all contributions and the fair
market values (FMVs) of the CDs under the plan.
However, if a participant has established more than one
IRA plan with the same trustee, a separate Form 5498
must be filed for each plan.


(bold added by me above. I got separate Form 5498s for my Vanguard mutual fund IRA account and Vanguard brokerage IRA account. (I had done Roth conversions directly into both accounts during the year.) The brokerage account 5498 was issued a couple of weeks after the mutual fund account 5498.)
Contributions. You must report contributions to any IRA
on Form 5498.
Transfers. Do not report on Form 5498 a
trustee-to-trustee transfer from (a) a traditional IRA or a
simplified employee pension (SEP) IRA to another
traditional IRA or SEP IRA, or to a SIMPLE IRA after the
first 2 years of plan participation; (b) a SIMPLE IRA to
another SIMPLE IRA, or to a traditional IRA or SEP IRA
after the first 2 years of plan participation; or (c) a Roth
IRA to another Roth IRA.
( ^ Seems plausible that the mutual fund account "conversion" to the brokerage account was classified as a trustee-to-trustee transfer?)
Statements to participants. [ . . . ] By January 31, 2020, you must provide
participants with a statement of the December 31, 2019, value of the participant's account. [ . . . ]

If you furnished a statement of the FMV of the account [. . . ] to the participant by January 31, 2020, and no
reportable contributions, including rollovers, recharacterizations, or Roth IRA conversions, were made
for 2019, you need not furnish another statement (or Form
5498) to the participant to report zero contributions.
However, you must file Form 5498 with the IRS by June 1,
2020, to report the December 31, 2019, FMV of the
account and the FMV of hard-to-value assets.
(^ obviously the IRS has the 2019 instructions for Form 5498 posted already.)

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Mon Jun 03, 2019 11:24 am

cas wrote:
Mon Jun 03, 2019 6:00 am
From a lay reading of the Form 5498 instructions (I am not an expert), the instructions (to the custodian) for Form 5498 seem to say that you should get a different Form 5498 for the mutual fund and brokerage IRA accounts, *but only if* some sort of transaction that is required to be reported to the IRS happened in that account. From my reading, a contribution to to an account would require a Form 5498 to be generated, but it kinda looks like a "conversion" (internal trustee-to-trustee transfer?) from a mutual fund account to a brokerage account would not be an action that would cause a Form 5498 to be generated.

*If* that is the case, the Form 5498 instructions seem to say that it was correct that Vanguard generated a 5498 for the mutual fund account (which received the contribution) but not for the brokerage account (which received what might have been classified as a trustee-to-trustee internal transfer?)
Thank you cas! Your post is extremely helpful.

The only transaction (that I can think of) that took place after the transition would be the reinvestment of dividends for the Target Retirement fund (which would have occurred sometime in late December). I will check on this when I'm done with work today (currently on lunch break).

Interestingly, I did receive a 2018 Form 5498 from Ally bank - even though I didn't make any contributions/transactions. I had opened a Traditional IRA with Ally back in 2017 because my previous employer had made a small contribution ($153.34) to my 401k after I had already left the company. The 401k provider sent me a check in the mail for this money and I opened a Traditional IRA savings account with Ally in order to do a rollover. Since then, I've just let it sit in the savings account, earning interest. The 2018 Form 5498 from Ally only has box 5 filled in ($157.32).

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Re: Possible Error by Vanguard on 2018 Form 5498?

Post by Silence Dogood » Tue Jun 04, 2019 11:11 am

Unfortunately, I was busier than expected yesterday.

However, I did find this post in another thread:
Alan S. wrote:
Sat Feb 27, 2016 5:59 pm
Did you make a contribution to the TIRA account for which you received the 5498?

If VG includes the year end FMV on a statement in January, they do not have to report the year end value again on a 5498. But they must report any contributions made to an IRA account on a 5498.

In other words, just with respect to the FMV, a custodian has the option of providing it on a 5498 or on a simple statement showing the FMV.
Checking on my Vanguard "December 31, 2018, year-to-date statement" I see on page 3:

"The fair market value (FMV) of your IRA, determined as of December 31, is being provided to the Internal Revenue Service."

So it looks like everything is fine.

Once again, Alan S has been super helpful.

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Re: Vanguard IRS Form 5498 error

Post by sleepysurf » Tue Jun 04, 2019 1:01 pm

Turns out, in my case, two additional Form 5498's came in the mail a few days later, so I ended up with THREE (original Rollover IRA Mutual Fund account, subsequent Rollover IRA Brokerage account, plus Roth IRA). Upon review, they all had different numbers, but each was technically correct. The information I thought was missing in the original, was, in fact, reported in the other two. My Vanguard rep confirmed that all three forms were submitted to the IRS by May 31st.

My situation was unique, because I rolled an outside 401k balance into my Mutual Fund Rollover IRA, before converting to the Brokerage account. Months later, I contributed $6500 to the Rollover IRA Brokerage acct, then did a partial Roth Conversion at the end of the year.
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