Why Did I Get A Form 5498? In May?

If you are under 70 1/2 and have an IRA or  Health Savings Account, you may have received a Form 5498 in May. Many people are confused as to its purpose and in particular, timing. It seems like you just got done gathering all your tax forms and now your financial institution sends this one in May? Hello, isn’t that a little late? Do I have to call my accountant or my financial planner again?

Hold the calls. You may remember reporting on your tax return that you made some contributions to these accounts. Perhaps you made them last year, or perhaps you made them right before the April 15 deadline this year and had them “count” for last year.

The purpose of the Form 5498 is for the financial institution to verify to the IRS that you did indeed make the contribution that you claim you did on your tax return. Since everyone has until April 15 to make those contributions, the IRS gives the financial institutions until May 31 to send the Form.

Before you file it away, make sure the financial institution reported accurately. Last year, my husband and I both had erroneous 5498’s for our Health Savings Accounts. I made my 2017 contribution in February 2018 and he made his on an ongoing quarterly basis. Mine showed 0 contributions for 2017 and his showed 2 years’ worth. So we called the bank where they are held and got corrected ones issued.

It only takes a few minutes to check it out – does your contribution amount look correct? Did you take any distributions, and if so, do those look correct? (If not, make sure it says 0.) Is your SSN correct? Your name, including your middle initial?

Don’t give the IRS any discrepancies to investigate. Make sure the 5498 matches up with reality, and remember it arrived when it was supposed to.

Holly Donaldson

Holly P. Donaldson, CFP® writes and consults on the psychology of money. Her fee-only, product-free financial planning practice focuses on increasing financial self-efficacy for those seeking a financial navigator to help them make good decisions. She is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch." With a fully virtual practice in Seminole, Florida, she primarily serves clients located in the Tampa, St. Petersburg, and Clearwater areas. Holly will also work with clients who are a good fit located elsewhere in the United States.

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