Retirees who are looking for information on IRS tax Form 5498 may find it a head-scratcher. Here, I've compiled the crucial information you'll need to know about it.

RELATED:IRS Form 1040-SR: Tax Return Form For Seniors

In this article:

1. What Is IRS Form 5498?
2. What Are the Kinds of 5498?
3. Why Did I Receive Form 5498 Late?
4. What Do I Do with IRS Form 5498?
5. What's in the 5498 Form?

IRS Form 5498: What You Need to Know

What Is IRS Form 5498?

Form 5498 simply informs you about your contributions to your Individual Retirement Accounts (IRA) if your IRA has a manager and issuer.

Unlike other tax forms, you don't file Form 5498. Your income tax return generally doesn't require a Form 5498, but it can still help you reconcile your income tax return with the amount the IRS has on their end.

If you're worried about your contributions to your retirement account and the possibility of inaccurate information for your tax return, Form 5498 can give you peace of mind. The importance of accurate information can't be understated because the IRS penalizes inaccurate info, which can impact your retirement nest egg.

Form 5498 forms part of the tax documents you receive and contain reliable information about your contributions to your tax return. This tax form doesn't affect you directly, as it merely reports what you have given as a contribution, rollover or Roth conversions, but it's a good reference to help you in your tax reporting.

Important: If you have several different IRAs, you should be receiving several 5498 forms. Even if you only have a single custodian or issuer, the IRS requires a Form 5498 for each IRA type, not each beneficiary.

To make it clear:

• If you have two Traditional IRAs with one custodian, you only get one Form 5498.
• You get two of this form if you have two IRAs from two separate issuers.
• If you have a Health Savings Account, Coverdell Education Savings Account, and an IRA from one issuer, you get three forms from one issuer.

What Are the Kinds of 5498?

There are three kinds of 5498 forms based on what type of accounts are reported in them:

1. IRA Contributions: Form 5498; This form reports about retirement accounts like Traditional, ROTH, SEP, and Simple IRAs.
2. Health Savings Account Contributions: Form 5498-SA
3. Coverdell Education Savings Account Contributions: Form 5498-ESA

Important: For those who are already getting RMDs (Required Minimum Distributions), you'll get this form around January 31. For those who don't qualify for RMDs yet, specifically younger than 70, the retirement plan issuers send out the forms by May 31.

Why Did I Receive Form 5498 Late?

A taxpayer shouldn't be worried when they receive Tax Form 5498 after they did their tax filing around April 15. Issuers usually consider May 31 as the tax deadline for Form 5498, so taxpayers should expect to receive the form late.

The late receipt or even not receiving the form doesn't necessarily mean you're in trouble.

However, an investor should make sure that the information sent to the IRS matches what the retirement plan issuer reported. Again, discrepancies can mean more issues with the IRS, and in rare cases, a costly and lengthy tax audit.

Since the necessary information in 5498 relates to the year-end values of the portfolio, a taxpayer can contact their custodian or issuer to compare with what they have. Also, most, if not all custodians give out annual, quarterly or even monthly statements, which the taxpayer can use in good faith.

RELATED:IRS Form 5329 Instructions: How To File Retirement Plan Tax Form

What Do I Do with IRS Form 5498?

A taxpayer typically receives a copy around May 31st or earlier. Retirement account managers and tax preparers consider May 31st as the filing deadline.

Investors can consider the Form 5498 as a:

• Year-end statement to help them in tax preparation -- Since the numbers in the form show the total amount at the end of the calendar year, an investor can analyze and calculate their income tax from a retirement plan for their tax filing.
• Confirmation of how their investment grows, before and after taxes -- This kind of information will tell investors whether they should think about changing their custodian or not. Through this form, they can compare the growth of their investment to how the market grows.
• Verifying tax preparation documents -- The Internal Revenue Service also receives the Form 5498, which allows a taxpayer to check if he or she has filed a proper tax return.

The Tax form will report:

1. IRA contributions up to December 31 -- All information in the form should reflect calendar year-end, not tax year-end, which is usually April 15.
2. SEP and SIMPLE IRAs
3. Roth IRAs
4. Conversions to a Roth IRA
5. RMD or Required Minimum Distributions -- The law requires that retirees 70 take a minimum distribution, whether they like it or not.

Important: While the IRS requires the form to report calendar year information, almost all issuers also input contributions up to the end of the tax year. However, the form is quite easy to understand, so both the IRS and the taxpayer shouldn't have any cause for confusion.

What's in the 5498 Form?

1. For those who are looking for total IRA contributions, Box 1 contains that information. The breakdown of each contribution is in the later parts of the form.
2. Box 2 states how much contributions that are rolled over to other accounts. Direct transfers from one IRS to another do not trigger a 5498. Direct rollovers from one IRA to another typically are not reportable
3. Box 3 is for Roth IRA conversions.
4. The next box, box 4, contains recharacterized contributions.
5. Box 5 shows the fair market value of the portfolio.
6. Box 6 states the cost for life insurance, if there is, in the account.
7. Next is Box 7, which states whether the account is an IRA, SEP, Simple, or Roth IRA.
8. Box 8 states contributions for SEP.
9. The 9th box is for SIMPLE IRA contributions
10. Box 10 is for Roth IRA contributions
11. Box 11 will report if you have an RMD.

Again, it bears repeating that you, as the investor or beneficiary, don't fill out this form. 5498 can serve as confirmation of contributions, which you can use if you ever want to amend your tax return.

Getting a Form 5498 shouldn't be a cause of worry but of celebration. This just means your issuer is doing their job.

Additionally, you can use the form to confirm what you sent to the IRS and amend your income tax return if there are discrepancies. I hope this guide on Form 5498 has been helpful for you.

Do you have any questions about Form 5498 or any other tax documents? Feel free to ask us in the comments section below.

Up Next:

• New IRS Rule Makes Short-Changing Retirees Easier
• What Is FICA Tax And How Does It Help Retirees?
• Top Cannabis Stocks To Look Out For | A Complete Guide To Cannabis Stocks Investing