Tax Forms - Form 1099-R
Form 1099-R is used to inform the IRS that funds or assets left your IRA. Some of the events that cause a 1099-R to be generated are: a distribution, Roth conversion, recharacterization, rollover, etc.
Madison Trust mails all Form 1099-Rs to accountholders by January 31st of the calendar year following the taxable event. Please note that 1099-Rs are only generated for years when assets or funds leave an account. If such a transaction does not take place in a given year then the accountholder will not receive a 1099-R form for that year.
Yes. Please provide a copy of the form to your accountant or tax preparer as they will need the information to prepare your return.
Tax Forms - Form 5498
The IRS requires Madison Trust to file form 5498 each year in order to report the fair market value (FMV) of the IRA based on the client-reported last-known-value.
Form 5498 reports any rollovers, contributions, conversions or recharacterizations received in your IRA during the prior tax year.
Further, this form is used to indicate if you are required to take a Required Minimum Distribution (RMD).
No. The IRS does not require you to file Form 5498 with your tax return. The form is for your records only. Madison Trust will file Form 5498 directly with the IRS.
Form 5498 is electronically reported to the IRS by Madison Trust by June 1st of the relevant year.
Form 5498 is mailed to accountholders by May 31st of the relevant year.
Tax Forms - Form 990-T
IRA accountholders are responsible to file Form 990-T if their IRA investments generate UBIT (Unrelated Business Income Tax) and/or UDFI (Unrelated Debt Financed Income), such as:
- When an IRA invests in a business which generates “active income” as defined by the IRS here: https://www.irs.gov/pub/irs-pdf/p598.pdf, then the profits are subject to UBIT (Unrelated Business Income Tax) and the filing of Form 990-T is required.
- When an IRA uses leverage to purchase an investment, then the earnings attributable to the leveraged portion are subject to UDFI (Unrelated Debt Financed Income) and the filing of Form 990-T is required.
It is the accountholder’s responsibility to prepare Form 990-T and forward it to Madison Trust Company for signature. Madison Trust Company returns the countersigned form to the accountholder to file with the IRS.