Get new articles by email:

Oblivious Investor offers a free newsletter providing tips on low-maintenance investing, tax planning, and retirement planning.

Join over 20,000 email subscribers:

Articles are published every Monday. You can unsubscribe at any time.

Should I Keep My Form 5498?

A reader writes in, asking:

“Each year Vanguard sends me form 5498 showing the amount I contributed to my Roth. Is there any reason to keep these? Since Roth contributions don’t even show up on my return, I wouldn’t think I’d need them in case of an audit.”

It’s true that Roth contributions don’t show up on your tax return (unless you’re claiming the retirement savings contribution credit, that is). But, yes, Form 5498 is still a form you’ll want to hang on to. In fact, depending on your circumstances, you may want to keep your Forms 5498 for a long time — much longer than just the 3-year statute of limitations for IRS audits.

To explain, let’s back up a step and talk about Roth IRAs in general. As you may recall, Roth IRA contributions can be withdrawn at any time, free from tax and penalty. It is only when you are withdrawing earnings (or amounts converted from a traditional IRA or 401k) that you have to jump through various hoops in order to avoid tax and penalty.

So, in the event that you want to take one of these tax-free distributions of Roth IRA contributions, how do you know (and how could you prove to the IRS) how much you’ve contributed to your Roth IRAs over the years? By looking at your Forms 5498.

And depending on how much you’re taking out of the account, you may have to go way back in order to prove sufficient contributions — which is why you’ll generally want to hang on to these forms at least until you’ve a) reached age 59.5 and b) had a Roth IRA for 5 years such that you could take out earnings free from tax and penalty as well.

If you’ve already thrown away your old Forms 5498, your brokerage firm may be willing to send you copies from prior years. (In some cases, even brokerage firms where you used to have an account will be able to send you tax forms upon request.) But, of course, the longer you wait, the less likely it is that they’ll still have the document you’re requesting.

For More Information, See My Related Book:


Taxes Made Simple: Income Taxes Explained in 100 Pages or Less

Topics Covered in the Book:
  • The difference between deductions and credits,
  • Itemized deductions vs. the standard deduction,
  • Several money-saving deductions and credits and how to make sure you qualify for them,
  • Click here to see the full list.

A testimonial from a reader on Amazon:

"Very easy to read and is a perfect introduction for learning how to do your own taxes. Mike Piper does an excellent job of demystifying complex tax sections and he presents them in an enjoyable and easy to understand way. Highly recommended!"
Disclaimer: By using this site, you explicitly agree to its Terms of Use and agree not to hold Simple Subjects, LLC or any of its members liable in any way for damages arising from decisions you make based on the information made available on this site. The information on this site is for informational and entertainment purposes only and does not constitute financial advice.

Copyright 2024 Simple Subjects, LLC - All rights reserved. To be clear: This means that, aside from small quotations, the material on this site may not be republished elsewhere without my express permission. Terms of Use and Privacy Policy

My Social Security calculator: Open Social Security