Fidelity 5498 reporting inconsistencies

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RJ2010
Posts: 62
Joined: Tue Dec 15, 2020 9:32 pm

Fidelity 5498 reporting inconsistencies

Post by RJ2010 »

Are financial institutions required to report 5498 for IRAs every year even without contribution?

It seems that Fidelity sends 5498 inconsistently.
my wife has a Traditional IRA (we deducted from federal tax return when contributed) and Roth IRA. She stopped contributing to both TIRA and Roth a while back.

For Roth IRA, she still gets 5498 (reporting balance) every year.
For traditional IRA, last 5498 she got was in 2016. that year, she didn't contribute either. so it's just balance reporting. after 2016, fidelity stopped sending 5498 (or posting to the account via PDF).

I'm puzzled why they do this differently between traditional IRA and roth IRA?
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Monster99
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Joined: Tue Aug 29, 2017 10:28 am

Re: Fidelity 5498 reporting inconsistencies

Post by Monster99 »

My experience was the opposite - I got one for my tIRA every year but only got one for the Roth when there was activity.
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celia
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Location: SoCal

Re: Fidelity 5498 reporting inconsistencies

Post by celia »

The 1099-R reports withdrawals from either type of IRA.

Form 5498 reports incoming contributions, Roth conversions, recharacterizations, and rollovers.

I think Roth conversions, recharacterizations, and some rollovers will cause both forms to be generated (possibly from different custodians) since two accounts are being impacted from the transaction.

I've recently noticed a change in the custodian's reporting requirements (in the IRS file format of the electronic 1099-R and 5498 files they have to submit). This is probably due to the SECURE Act which took effect for 2020, particularly because of the RMD age change and how soon the Inherited IRAs must be emptied out. It used to be that the year-end value of every IRA was reported to the IRS, but now it might only be if a 5498 is required. So it is possible to see these and other inconsistencies since 2019.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
MarkNYC
Posts: 1984
Joined: Mon May 05, 2008 7:58 pm

Re: Fidelity 5498 reporting inconsistencies

Post by MarkNYC »

RJ2010 wrote: Fri Jan 22, 2021 6:09 pm Are financial institutions required to report 5498 for IRAs every year even without contribution?
No. When there are no contributions for the year, the IRA custodian has some flexibility. Unless they've been changed by recent legislation, I believe the following rules still apply.

By January 31 of the following year, the custodian must furnish the IRA owner with a statement showing the fair market value of the account at the end of the year. A year-end account statement should serve this purpose.

If contributions were made for the year, then by May 31 of the following year, which is the filing deadline for Form 5498, the IRA owner must generally receive either a copy of Form 5498 or a qualifying substitute. The substitute must meet the format specification provided in IRS Publication 1179.

If there were no contributions for the year, the Form 5498 is not required to be furnished to the IRA owner, but then the fair market value statement would have to explain what information is being sent to the IRS.

If an RMD is required, there is additional information that the custodian must provide to the account owner.
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