How do I report the Fair Market Value (FMV) of my IRA investments? (IRS Form 5498)

Created July 21, 2021 15:50

At Rocket Dollar, customers self-report their FMV in our investment tracker. All assets held in IRAs must be valued every year with IRS Form 5498.

Why have I never heard of this?

Form 5498 is reported for every IRA retirement account in the United States. When it comes to stocks and bonds, the price tracking structure of those assets has decades of infrastructure so that your investment providers can file it automatically. If you look closely at your mail and digital inboxes during tax time, you might see your stocks and bonds providers sending you a copy of Form 5498

When it comes to private assets, Rocket Dollar needs a little help from you to make sure it is reported accurately. Rocket Dollar wants to continue to make it easier to value private assets.

How do I report my Fair Market Value at Rocket Dollar?

TAX TIME NOTICE*********Rocket Dollar has recently been pushing a wide variety of important technical updates. FMV custom reporting is currently disabled and will return in the near future. FMV reported values were already drawn on December 31st, 2021, and confirmed with investors in January or February.********

Log into your Rocket Dollar Dashboard
Open the investments tab
Enter or update the value of all your investments
Update your cash value from the value of your account at our partner bank
Then our custody partner sends IRS Form 5498 to the IRS.

What if the investment tracker is not taking my investment?

Make sure to use whole numbers. Currently, our investment tracker does not take decimal points.

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Do I need to report the IRS form 5498 on my taxes?

Solera has provided this answer for clients, "Solera National Bank will then submit Form 5498 to the IRS and provide you with a copy for your records."

A message from our partner bank, Solera:

The IRS requires Form 5498 to be filed annually for every Individual Retirement Account (IRA) Plan. Form 5498 provides information to the IRS about contributions made to the IRA along with the Fair Market Value (FMV) of the IRA Plan. In order to report accurate information to the IRS, you, as the manager of your self-directed IRA, must provide Solera National Bank with an accurate valuation of the LLC or Trust that your IRA Plan owns as of December 31st each year. You do not need to wait until December 31st; you may submit the expected value at your earliest convenience. Solera National Bank will then submit Form 5498 to the IRS and provide you with a copy for your records.
The information must be submitted to the Rocket Dollar Investment Tracker on the dashboard by December 31st.
We recommend you seek legal and tax advice before submitting your FMV to ensure you are complying will all applicable laws and regulations. Solera National Bank will not provide any such advice. We have prepared a list of frequently asked questions that we suggest you review prior to submitting your FMV.

What if I'm using IRAR Trust as a custodian?

We will work together with IRAR to make sure your Form 5498 is filed, but need you to complete your investment tracker as of investment values from December 31st, 2019 in order to do so.

FMV FAQS

Why is the fair market value (FMV) required?

The IRS requires that Form 5498 be filed annually for every Individual Retirement Account (IRA). Form 5498 provides information to the IRS about contributions made to the IRA along with the Fair Market Value (FMV) of the IRA Plan.

Is this only a requirement for self-directed accounts?

No. Filing Form 5498 to the IRS is an annual requirement of all IRA accounts in America. All of your custodians of stocks and bonds send these off automatically as the value of your assets in those accounts is easier to determine. Since you are the asset manager of your self-directed IRA, you must provide to our custodian partner the value of the assets held in your IRA. These records are your responsibility to maintain. If you refuse to report accurate information, Rocket Dollar still has to send a value to the IRS for all IRAs.

Do I need to provide valuations for both my IRA and LLC accounts?

No. You should submit the total value of the assets held in your LLC, which your IRA owns. If you have any cash in your IRA account that has not been invested in your LLC or Solo 401(k), we will add that cash balance to the value you provide us and include the total value on Form 5498.

Who is responsible for submitting the FMV?

You, as the manager of the LLC or trustee of the Trust, are responsible for providing an accurate fair market value to your custodian (Solera National Bank). Your custodian is responsible for submitting that information to the IRS annually. If a customer is not cooperating, your IRA may be closed and distributed for noncompliance. If you were to come under audit, and your FMV was not reflective of the value of your investments and a cash balance of your IRA from year to year, that could lead to further issues.

Is a third-party valuation required?

You, as the manager of the LLC or trustee of the Trust, will be responsible for substantiating your FMV should the IRS request such documentation. Therefore, each person must make their own determination of the difficulty of assessing the fair value of the underlying assets within their LLC /Trust and then determine if third-party assistance is necessary or warranted.

Do my actual investments get shared with the IRS?

No, only the values of the investments do. Rocket Dollar does not share any investment tracker data on Form 5498. If the IRS were to audit you because FMV was not reported accurately or consistently, then the IRS could ask you to share investment records.

When am I required to submit the FMV to Rocket Dollar?

December 31st, 2022

What happens if I do not submit my FMV before the deadline?
You will be assessed a late fee of $50 and your IRA may be closed and distributed for noncompliance.

How is the FMV determined?
Please refer to Internal Revenue Code, Department of Treasury Regulations § 25.2512-1 through § 25.2512-6. Please refer to Internal Revenue Code, Department of Treasury Regulations § 25.2512-1 through § 25.2512-6.

Whom can I contact for assistance?
Any questions about valuations should be directed to your CPA, tax attorney, or financial advisor.

Rocket Dollar has a CPA and Lawyer that we can introduce you to, and can provide basic education, but cannot assist you directly in valuing your asset. Contact us at info@rocketdollar.com to be introduced to a CPA or lawyer.