The Checklist You need to File the Form 5498 Series for 2020 Tax Year

With 2 weeks left to meet your deadline, here are some tips!

When it comes to completing your IRS tax form, preparation is key. The easiest way to file successfully is to have all the right information in front of you. Once you know what you need to file, the process is much smoother. 

The Form 5498 is a lesser known series of tax forms, but they are a complex bunch. This series of forms is used to report information about IRAs, certain health savings plans, and the Coverdell Education Savings Plan. 

These forms should be filed by the trustee of the account, this is usually a bank or financial institution. 

To successfully file the 5498 forms, you can use this checklist as a guide.

This may seem completely too obvious, but it is still a common error. For example this form is usually due on May 31. However, this is not the case this year. The IRS extended the deadline to June 30, 2021

It is also important to note the deadline for distributing your recipient copies. The IRS requires trustees of these accounts to furnish each account holder with a copy of the form. This year the deadline to distribute copies is the same as the IRS deadline, June 30, 2021. 

Form 5498

IRS Form 5498 deals with Individual Retirement Arrangements. The IRS requires that trustees report certain information about the annual activities to these accounts. They must file a Form 5498 for each account participant. In this form trustees of these accounts must provide the contributions, rollovers, Fair Market Value (FMV), Minimum Distribution Requirements (MDR), and recharacterizations of the account. 

Form 5498-SA

Form 5498-SA  deals with different types of medical savings plans. This includes the Health Savings Account (HSA), the Medical Advantage Health Savings Account (MA HSA), and the Archer Medical Savings Account (MSA). The trustees of these accounts must provide information to the IRS regarding contributions and rollovers during the tax year. 

Form 5498-ESA

This form deals specifically with the Coverdell Education Savings Account. This is an education savings account that parents or grandparents can set up for their children and grandchildren to help save for their education. This account is available to individuals under a certain income bracket. The trustee of this account must report the contributions and rollover contributions on Form 5498-ESA.

Make sure that you send the correct copies to the correct party. Copy A should go to the IRS, Copy B should go to your account participant, and Copy C should be kept for your institution’s records. 

The most important information that is reported on this form is the amount that the account holder contributed, whether they are contributing to a health saving, education savings, or retirement savings account, this amount is required on each Form 5498. 

Some accounts, like the ESA, have an annual limit for how much the account holder can contribute. If they file more than this amount, they can be penalized. This form will help the account holder and the IRS keep track of the contributions being made. 

If you are reporting information about a traditional IRA, there are some important rules to follow. The account holder is required to withdraw a certain amount of funds from their account when they reach age 72. While the account holder can take more than this minimum amount, they must make this withdrawal, therefore you must report it on the Form 5498. 

Now that you have a checklist, it’s time to get started! TaxBandits is here to help. You can easily e-file your Forms 5498 in minutes and transmit your form to the IRS! We even offer a printing and mailing solution for your recipient copies. 

Start e-filing now!

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