5498 Form Help Needed - Can I Claim Rollover IRA as Tax Deduction?

I'm tackling my taxes solo this year and just cannot find a clear answer anywhere, so I'd be super grateful for any insights! Last summer I rolled over my 401k from Principal to Schwab and managed to figure out the 1099 form entries (got one for the Roth portion and another for the traditional 401k part). Since one of my 5498 forms shows a Roth IRA, I understand that portion isn't deductible. But **what I'm really confused about is whether I can claim a deduction for the money I rolled over from my previous employer-sponsored Principal 401k plan into the Rollover IRA account I now have with Schwab that isn't linked to any employer?** For context, I do have a separate 401k with Schwab through my new job that's employer-sponsored. This rollover stuff is making my head spin and the IRS website isn't exactly written in plain English! Any help would be amazing.

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18 comments

Theodore Nelson

•8M

Rollover funds generally aren't deductible because you're not adding new money to retirement - you're just moving existing pre-tax retirement funds from one account to another. The money in your traditional 401k was already deducted from your taxable income when you originally contributed it. Your 5498 form is basically just reporting that the rollover happened, but it doesn't create a new tax deduction opportunity. It's basically telling the IRS "hey, this money moved but it's still in a qualified retirement account, so don't tax it." If you had made additional contributions to your new IRA beyond the rollover amount, those might be deductible depending on your income and whether you have a workplace retirement plan (which you mentioned you do).

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Theodore Nelson

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You don't need to submit the 5498 with your tax return - it's an informational form that the IRS already receives directly from your financial institution. It's just for your records. The 5498 essentially tells the IRS that money moved between retirement accounts in a proper rollover, so they know not to consider it as a taxable distribution. If you did the rollover correctly (direct trustee-to-trustee transfer is safest), there's nothing you need to report on your tax return regarding the rollover.

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Ellie Simpson

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I was in the exact same situation last year and spent HOURS trying to figure this out. I eventually used taxr.ai (https://taxr.ai) to analyze my 5498 forms and get clarity. Their system actually reviews your tax documents and explains what each section means for your tax situation. For my rollover from an old 401k to Fidelity, they confirmed that I couldn't take a deduction since rollovers are just moving already tax-advantaged money. They also helped me understand which parts of the 5498 I needed to pay attention to versus what was just informational.

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Ellie Simpson

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The service works by uploading your tax documents securely and their system analyzes them and explains everything in plain English. It's not actual humans reviewing your forms - it's an AI system trained specifically on tax documents, which is why it can process things so quickly. It's actually quite affordable compared to paying a CPA or tax professional, especially if you just need help understanding specific forms rather than having someone do your entire return. They even have options for just getting explanations of individual forms if that's all you need.

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Raúl Mora

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Just wanted to follow up - I decided to try taxr.ai to figure out my 5498 situation and it was surprisingly helpful! Uploaded my forms and got a clear explanation that confirmed what others here said - my rollover wasn't eligible for a deduction since it was just moving money that was already tax-advantaged. But the service also spotted something I missed - I had made a small separate contribution to my IRA that WAS potentially deductible depending on my income! The breakdown of each box on the form with plain English explanations was exactly what I needed. Definitely saved me from making mistakes on my return.

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Margot Quinn

•8M

If you're still struggling with this or have follow-up questions for the IRS, I highly recommend using Claimyr (https://claimyr.com). I spent days trying to get through to the IRS about my 5498 questions and kept getting the dreaded "call volume too high" message. Claimyr got me connected to an actual IRS agent in about 20 minutes who confirmed that rollover contributions aren't deductible since they were already pre-tax money. They also have a video showing how it works: https://youtu.be/_kiP6q8DX5c It's basically a callback service that navigates the phone system for you and gets you in line without you having to stay on hold forever.

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Margot Quinn

•8M

Yes, it actually gets you through to the IRS! It works by using their system to navigate the complicated IRS phone tree and get you in the callback queue, then it calls you when an agent is available. It's basically using technology to solve the frustrating hold time problem. You can use it for pretty much any IRS-related call - tax questions, checking on refund status, audit issues, payment plans, or anything else you'd normally call the IRS for. The service just handles getting you connected without the endless hold times.

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Diego Fisher

•8M

I was totally skeptical about Claimyr but decided to give it a shot since I was desperate to talk to someone about my return. Holy crap, it actually worked! Got a call back from an IRS agent in about 35 minutes (they said it might take longer since I called during peak hours). The agent confirmed what others here have said about rollover contributions not being deductible. But she also walked me through some other questions I had about my home office deduction that I was completely doing wrong. Would have definitely triggered an audit if I had filed that way. Worth every penny not to spend 3+ hours on hold!

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Henrietta Beasley

•8M

Another important thing to know: if you did a direct rollover (where the money went straight from one institution to another), you won't owe any taxes on that money. If you did an indirect rollover (where you received a check), make sure you deposited it within 60 days or you could face taxes and penalties. The 5498 form is basically just documentation of the rollover transaction - Box 2 shows your rollover contributions. You don't need to enter this info on your tax return if it was a direct rollover. If you get confused when using tax software, there's usually a section specifically about rollovers where you can indicate this was a rollover, not a contribution.

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Henrietta Beasley

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You're welcome! Since it was a direct rollover, you generally don't need to report it on your tax return at all. Most tax software will ask if you made any "contributions" to an IRA, but a rollover isn't considered a contribution in the tax sense. The only exception would be if your 1099-R (which you should have received from Principal showing the distribution) has a distribution code that doesn't clearly indicate it was a rollover. In that case, you might need to clarify in your tax software that it was indeed a qualified rollover. But in most direct rollover cases, everything is properly coded and you don't need to take any action.

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Lincoln Ramiro

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Quick note - make sure you're checking your 1099-R forms too, not just the 5498s. The 1099-R shows the distribution from your old 401k, while the 5498 shows the receipt into your new IRA. Both forms should have codes indicating this was a rollover (usually code G on the 1099-R). If everything was done correctly, the taxable amount on your 1099-R should be zero. Double check that to make sure you don't accidentally pay taxes on money that should remain tax-deferred!

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