How to Report Late IRA/HSA Contributions in Federally Declared Disaster Areas
By Jodie Norquist, CIP, CHSP
You may have noticed an increase in clients making late IRA transactions because they live or work in a federally declared disaster zone. This year the IRS has been steadily providing tax relief for taxpayers affected by severe storms, tornadoes, straight-line winds, flooding, wildfires, and those individuals and businesses affected by terrorist attacks in Israel.
This disaster relief can affect your financial organization and how you report certain IRA transactions. For example, the IRS postponed the federal tax return deadline to June 17, 2024, for certain counties in seven states—including California, Connecticut, Michigan, Maine, Tennessee, Washington, and West Virginia. Individuals and businesses affected by the terrorist attacks in Israel have until October 7, 2024, to make 2023 IRA and HSA contributions, as well as other retirement plan contributions and rollovers. Taxpayers who live and work in Ohio affected by tornadoes in March now have until September 3, 2024, to file their federal tax return.
In addition, affected taxpayers who have a qualified retirement plan or IRA may be eligible for a special disaster distribution that is not subject to the 10 percent early distribution penalty tax and allows the taxpayer to spread taxation over three years. They may also be able to take a hardship distribution from their plan.
The IRS offers a list of the most recent tax relief provisions online in Tax Relief in Disaster Situations, located in its Newsroom. The information details who the affected taxpayers are, the scope of the relief, and any special reporting instructions.
Listed below are the most recent federally declared disaster areas. Click on the state link to learn which taxpayers in specific counties are affected by this disaster tax relief.
Recent Disaster Relief Guidance for Taxpayers
Reporting Late IRA/HSA Contributions
The IRS does not require financial organizations to correct or amend Form 5498 for account owners who make late contributions because of disaster postponements. Instead, according to the 2024 Instructions for Forms 1099-R and 5498, these postponed IRA contributions should be reported in Boxes 13a, 13b, and 13c on the 2024 Form 5498.
On Form 5498, report the following:
Box 13a., Postponed/late contrib. — the amount of the postponed contribution made in 2024 for a prior year
Box 13b., Year — Enter the year for which the postponed contribution was made
Box 13c., Code — Enter “FD,” which stands for “federally declared disaster area,” the reason the IRA owner made the postponed contribution
If an IRA owner makes contributions for more than one prior tax year, each prior-year contribution must be reported on its own separate Form 5498.
Although there is no official IRS guidance on how to report late HSA contributions, the 2024 Instructions for Forms 1099-SA and 5498-SA , state that 2023 HSA contributions are reported in Box 2, Total contributions made in 2024, of the 2024 Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information. HSA owners report these contributions to the IRS for the 2023 tax year by filing Form 8889, Health Savings Accounts (HSAs), with their federal tax return.
Other Eligible IRA-Related Acts Affected by Federally Declared Disasters
Eligible taxpayers affected by federally declared disasters may often postpone other actions related to their IRAs. Examples of tax-related acts that may be postponed include the following.
Removing excess IRA contributions
Recharacterizing IRA contributions
Making or receiving an IRC Sec. 72(t) substantially equal periodic payment
Taking a required minimum distribution (RMD)
Making a qualified disclaimer of inherited assets
Completing rollovers
If an account owner is unsure how to report or self-certify these postponed contributions or any other tax-related acts, it’s always a good idea to refer them to a competent tax advisor for assistance. To stay updated on the latest disaster relief guidance issued by the IRS, check the IRS’s Tax Relief in Disaster Situations webpage.
