Get Ready to Roth & Roll

New Roth IRA conversion eligibility rules will affect your 1099-R and 5498 reporting processes

A new tax law has created a new opportunity for high earners who, until now, were traditionally unable to qualify to contribute to a tax-advantage Roth IRA. Because of this elimination of income limits, all taxpayers will be eligible to convert tax-deferred traditional IRAs and employer-sponsored plans to tax-free Roth IRAs after January 1, 2010, regardless of annual income.

The act of converting traditional IRAs and employer-sponsored plans to Roth IRAs involves a taxable distribution, which means increased 1099-R and 5498 reporting for your organization. As a business offering individual retirement arrangements (IRA) for its clients, you must file form 1099-R and Form 5498 for Roth IRA conversions, contributions, and distributions.

What are your reporting responsibilities?