You will receive Form 5498 each year if you are saving for retirement through an individual -retirement- arrangement.
During the tax year, your Individual Retirement Account must disclose your contribution to the IRS.
There are numerous retirement accounts available. Depending on your IRA, you may need to declare your contributions using Form 5498.
What contributions are reported on Form 5498?
“A rollover or conversion of assets from one retirement plan into an IRA is not deductible,” according to Turbotax.
However, they are considered contributions and need to be reported on Form 5498.
-The amount you contributed to a traditional IRA.
-The amounts contributed to a Savings Incentive Match Plan for Employees (SIMPLE) IRA.
-The amounts you put into a Roth IRA.
What transfers aren’t reported on Form 5498?
-A traditional IRA to another traditional IRA or a SEP IRA,
-A SIMPLE IRA to another SIMPLE IRA,
-A SEP IRA to another SEP IRA or a traditional IRA
-A Roth IRA to another Roth IRA.
Turbotax also mentions that straight trustee-to-trustee transfers usually are not reported on Form 5498.
Can I deduct my contributions?
Depending on your eligibility you can make deductible your contributions to a traditional IRA.
When you begin taking withdrawals, you need to report the exact amounts as income on your tax returns.
All the limits on the possible deductions appear in box 1 of Form 5498.
Every year, there’s a new maximum contribution amount subjected to taxpayers that the law imposes.
Nevertheless, depending on your retirement plan at work and spouse contributions to a different IRA account, you may not be eligible to take a full deduction.