Do I need to submit Form 5498 with my tax return?
Those who have formal retirement savings plan must report information on contributions to the IRS. But, what form is needed to provide this information?
Although the formal tax deadline has passed, there is still time to submit a return and receive benefits. However, be aware that various delays have caused lengthier wait times for millions hoping to see their refund.
When completing your taxes, one aspect of personal wealth that must be reported on is contributions to a retirement plan, if a taxpayer has one. For individual retirement arrangements, or IRAs are they are more commonly known, a 5498 form must be submitted to the IRS. Wealth managers and other financial institutions who hold IRA retirement must provide supplemental information to that of the taxpayer.
Do individual taxpayers submit Form 5498?
No. The financial institution that manages your IRA submits this form which includes information related to “contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account,” for each individual they manage a portfolio on behalf of.
However, in order to complete your taxes and report on your retirement contributions, the manager of your account will send you a 5498 with this information to expedite the process. This information can then be entered when filing your taxes.
How many people in the US have a retirement plan?
According to the Pension Rights Center, of all private sector, state, and local government workers, only thirty-seven percent participate in a retirement or pension plan. This analysis was completed in 2019 and included information from more than 139 million full and part-time workers.
Brookings released a new report this week that shows that the lack of private retirement savings will lead to a “$3.8 trillion retirement shortfall” in social security benefits over the next decade. This is primarily motivated by two factors.
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The first being that over 50 million workers in the US do not have a formal retirement savings portfolio, leaving them reliant on social security benefits. The second relates to the increase in life expectancy in the US. As Americans live longer, 40% will spend what they have saved for retirement before they pass away.
Brookings suggests the government invest in programs that would make it easier for employers to offer retirement savings programs like an IRA to lower the burden on social security. This would help small businesses that may not have the income necessary to provide this sort of benefit.