IRA trustee-to-trustee transfer - Form 5498

[Atila]

When an traditional IRA is transfered between trustees, which trustee (transforor or transforee-or are both) is required to file Form 5498? The instructions to Form 5498 state "File form 5498, IRA Contribution Information, with the IRS by June 2, 2013 for each person for whom in 2013 you maintained any individual reirement arrangement..." However, the reporting is based on the FMV on December 31, 2013. If the transferor trustee no longer holds the IRA it would not know the FMV at the end of the calander year. I understand that Form 5498 need not be filed upon transfer; but what about at the end of the calander year? If the transforor trustee is required to report, then how should it obtain the value infomration required?

Any direction would be much appreciated!

[jpod]

I looked at this issue maybe 25 years ago. My recollection is that there was no specific guidance at the time but the only thing that made sense was that the successor trustee must file but the former trustee shouldn't file (otherwise you would have redundant filings with nothing to enable the IRS or the owner to reconcile them).

[Belgarath]

Perhaps it must be filed showing a zero FMV by the transferor, but the transfer itself isn't reported? And the transferee also files one showing the transfer amount coming in? I grant you it seems stupid, but the instructions sort of seem to lead you in that direction?

As to the transfer amount itself...

　

Transfers. Do not report on Form 5498 a direct trustee-to-trustee transfer from (a) a traditional IRA to another traditional IRA or to a simplified employee pension (SEP) IRA, (b) a SIMPLE IRA to another SIMPLE IRA, © a SEP IRA to another SEP IRA or to a traditional IRA, or (d) a Roth IRA to another Roth IRA. For reporting purposes, contributions and rollovers do not include these transfers.

[masteff]

Top of 2nd column, page 18 here: http://www.irs.gov/pub/irs-pdf/i1099r.pdf

　

Total distribution, no contributions. Generally, if a total distribution was made from an account during the year and no contributions, including rollovers, recharacterizations, or Roth IRA conversion amounts, were made for that year, you need not file Form 5498 nor furnish the annual statement to reflect that the FMV on December 31 was zero.

[Atila]

Thanks!

Your collective comments have confirmed my reading of the insturctions.

[Borsley]

Top of 2nd column, page 18 here: http://www.irs.gov/pub/irs-pdf/i1099r.pdf

　

Total distribution, no contributions. Generally, if a total distribution was made from an account during the year and no contributions, including rollovers, recharacterizations, or Roth IRA conversion amounts, were made for that year, you need not file Form 5498 nor furnish the annual statement to reflect that the FMV on December 31 was zero.

Is this a relevant cite? The scenario was a transfer, not a "total distribution". Doesn't this refer to a total liquidation of the IRA? In the case, the IRA just moved from one financial institution to another. Funds were not distributed out of the IRA.

IRA rollovers (distributions and eventual rollover to another financial institution) require tax reporting of the event. Trustee-to-trustee transfers do not involve any tax reporting (1099r or 5498) related to the transfer. There is no taxable event, so the IRS does not care (for instance) that you moved your IRA from Fidelity to Vanguard.

As to reporting the FMV on 12/31, that would fall on the institution that held the IRA at the time. Note: there are alternatives to reporting FMV on 5498s such as showing it on a year-end statement instead.

[Borsley]

Maybe this will help:

Form 5498 can also be used to report the fair market value of the IRA balance as of December 31. However, if it is used to report the December 31 fair market value, it must be issued to the IRA owner by January 31. Most custodians/trustees choose to report the December 31 fair market value in another format, such as including a notification on the IRA owner’s year-end account statement, to the effect that the fair market value is $X amount and that it will be reported to the IRS.

source: http://www.retirementdictionary.com/definitions/224/form5498orirsform5498or5498