Reduce Form 5498 Reporting Errors with this Simple Step
This is a busy time for financial organizations, especially for those that manage IRAs. The tax reporting season isn’t over after April 15, the federal tax return deadline. Financial organizations are required to send Form 5498, IRA Contribution Information, to the IRS by May 31. This form reports regular contributions to Traditional and Roth IRAs, as well as SEP and SIMPLE IRA contributions, rollover contributions, Roth IRA conversions, recharacterizations, and the account’s December 31 fair market value.
Financial organizations must also provide an account statement to IRA owners (and beneficiaries, if applicable) by May 31 to report the same contribution information that was reported on Form 5498. The account statement is not a substitute for Form 5498; it is a separate report required by the Treasury regulations. Financial organizations may, however, use a copy of Form 5498 (or a substitute Form 5498) to meet the account statement reporting requirement. Many organizations (including Ascensus) take this approach.
As you’re preparing to send your Form 5498 files to your vendor for printing, you’ve probably caught some reporting errors as you audit the files. But mistakes happen. And those errors that inevitably slip through are likely those that keep you up at night. It’s not fun getting a phone call or visits from upset clients after they received an incorrect Form 5498.
IRS reporting requirements can change each year, along with IRA rules and regulations. Your core processor may not have updated for new instructions and, as a result, your batch of Forms 5498 can’t be properly printed and sent to the IRS. We hear frequently about these types of headaches. There are generally two types of errors: formatting and reporting mistakes. Some of these errors can’t be fixed as easily as generating a corrected form.
Don’t you wish someone with advanced IRA compliance knowledge could quickly scan through your Form 5498 submissions searching for mistakes before they ever make it to print?
Guess what? Ascensus performs these jobs and many more for our Fully-Administered clients. We can take the worry—and the work—out of the reporting process. We simply need you to send us your reporting data and we’ll run it through our complex compliance wizards, which will flag errors or anything that needs a closer look. We have different ways of obtaining your data and remitting it to the IRS. Our compliance engines will scan your file and will alert us immediately if there is a formatting issue and indicate what steps to take to remedy the problem. If the file is accepted, then the next stage of compliance logic will search for other discrepancies in the files that may need manual intervention. Then our compliance engine technology scans the data for a third time to verify the accuracy of your tax reporting forms. On the third pass, it is searching for more tricky or subtle reporting errors. Our system is continually updated for the latest IRS reporting and regulatory changes based on research and analysis by our ERISA experts. At Ascensus, we pay close attention to regulatory changes that impact the retirement industry, especially for our clients when it comes to tax reporting.
After the Forms 5498 are printed, we send them to your IRA owners and to the IRS. It’s that simple. And if you do need corrected Forms 5498, we can send those out for you, too. Last year we helped our clients generate over 1.6 million Forms 5498.
Need Help with Your IRA Reporting? Give us a Call.
If you’re not a Fully-Administered client, maybe it’s time to look into how we can help make your IRA program more efficient. Let us perform these back-office administrative tasks while you and your team focus on growing your business.
For more information, contact your Ascensus sales representative at 800-356-9140.
