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y3maya
New Member

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

This money had been invested in the Fairholme Fund. I don't know if it was pre-tax money or not. I am a novice!
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dmertz
Level 15

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

If the check was made out to the new IRA (in this case, the SEP IRA, and is sounds like it was, or was at least made out to the new IRA custodian for your benefit), this was a trustee-to-trustee transfer of the IRA and there would be no Form 1099-R; trustee-to-trustee transfers are not reportable on either Form 1099-R or Form 5498.  However, if the check was made out to the IRA participant, it is required to have been reported on Form 1099-R and reported on the participant's tax return, in this case as having been rolled over.

 

If no Form 1099-R was issued by the old IRA custodian, apparently the old custodian considered it to be a trustee-to-trustee transfer.  However, it seems that it was incorrectly recorded at the new IRA custodian, resulting in the issuance of the Form 1099-R.  If the Form 5498 shows it in box 2 as a rollover contribution, the IRS might question the transaction without a corresponding Form 1099-R showing a distribution, so be prepared to provide explanation that this was actually a trustee-to-trustee transfer of an IRA, not a distribution and rollover.  If the amount is shown in box 1 as a regular contribution, that's probably a bigger problem, and you should request a corrected Form 5498.  Even if reported as a rollover contribution, if the movement of the IRA was done by a proper trustee-to-trustee transfer, it wouldn't hurt to request that the receiving IRA custodian correct the Form 5498 to show that no regular or rollover contribution occurred.

 

And to answer your original question, you should answer No when TurboTax asks if this was a contribution.

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7 Replies

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

Was the Fairholme fund in a IRA or 401K Account?  You don't enter the 5498.  It could be a new contribution or a rollover.  

y3maya
New Member

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

Thanks for the reply! The Fairholme fund account was, itself, a Rollover IRA account.

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

OK  you don't enter it under Deductions.  It is not a contribution.   Just enter the 1099R you got.  Did you get a 1099R?  What code is in box 7?

y3maya
New Member

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

Checking, but did not get a 1099-R for this account. Only 5498. Again, thanks.

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

The 1099R would be from the old plan.  Did you roll it over  in 2019 or 2020?  Ask the plan if you got a 1099R.  Was it a direct transfer from the old plan to the new one?  Or did you get the check and deposit it into the new account?  @dmertz 

y3maya
New Member

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

I think we got the check, but if I remember, it wasn't a check to deposit, but to send directly on. Ugh. Wish I were clearer on this!

dmertz
Level 15

We rolled some money into a SEP IRA. Then received a Form 5498. When TurboTax asks whether we made a contribution... is the answer yes? Even though we didn't really?

If the check was made out to the new IRA (in this case, the SEP IRA, and is sounds like it was, or was at least made out to the new IRA custodian for your benefit), this was a trustee-to-trustee transfer of the IRA and there would be no Form 1099-R; trustee-to-trustee transfers are not reportable on either Form 1099-R or Form 5498.  However, if the check was made out to the IRA participant, it is required to have been reported on Form 1099-R and reported on the participant's tax return, in this case as having been rolled over.

 

If no Form 1099-R was issued by the old IRA custodian, apparently the old custodian considered it to be a trustee-to-trustee transfer.  However, it seems that it was incorrectly recorded at the new IRA custodian, resulting in the issuance of the Form 1099-R.  If the Form 5498 shows it in box 2 as a rollover contribution, the IRS might question the transaction without a corresponding Form 1099-R showing a distribution, so be prepared to provide explanation that this was actually a trustee-to-trustee transfer of an IRA, not a distribution and rollover.  If the amount is shown in box 1 as a regular contribution, that's probably a bigger problem, and you should request a corrected Form 5498.  Even if reported as a rollover contribution, if the movement of the IRA was done by a proper trustee-to-trustee transfer, it wouldn't hurt to request that the receiving IRA custodian correct the Form 5498 to show that no regular or rollover contribution occurred.

 

And to answer your original question, you should answer No when TurboTax asks if this was a contribution.

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