IRA Reporting to the IRS: Getting it Right!
While we may be completing several forms when establishing IRA plans and documenting IRA transactions, there are only two forms that are submitted to the IRS to report the distribution and contribution activity: the 1099-R and the 5498.
The boxes you check on your forms, and the transactions descriptions you use to process the work, translate into certain codes on the 1099-R IRA Distribution Reporting and the population of the contribution boxes for the types of contributions on the 5498.
If the reported transactions by the bank do not match what the customer is saying on their tax return, it can create all kinds of nightmare scenarios for the customer to explain to the IRS that it was a “bank mistake.”
And, if you have ever had to correct previous year reporting mistakes, you never want to do it again. You will want to make sure it is correct when the forms are originally submitted.
