When is an IRA or Pension payment reported to the IRS and how is it taxed?

Expert Solution

When the saving is made for retirement with an individual retirement arrangement (IRA), he/she probably will be receiving a Form 5498 each year. The institution who will be manages the IRA will be required to report on the form all contributions done in the account during the taxation year. On the basis of type of IRA taxpayer have, he/she requires Form 5498 to report IRA contribution deductions on the tax return. On the Form 5498 the IRA Contributions Information reports the contributions made to IRA to the IRS. The IRA issuer or trustee will be filing the form with the IRS by May 31.

Contributions to traditional IRAs will be deductible for the taxation as the earnings grow tax free, but the withdrawals are subject to income tax. Contributions to a Roth IRA would not be eligible for the deductions however the withdrawals are tax-free when the owner has had a Roth IRA account for a period of minimum five years.

ekkarill92 answered 1 year ago

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