Confused about Roth IRA Contributions, Withdrawals, and Form 5498 for First-Time Home Purchase

That's a common point of confusion! Form 5498 is an information return that your IRA custodian (the financial institution where you have your Roth IRA) files with the IRS to report your contributions. They should have sent you a copy, but many people don't notice it because it typically arrives in May after the tax filing deadline. You're correct that you don't report Roth IRA contributions on your tax return directly (unless you're eligible for the Saver's Credit). However, for a first-time home purchase, you can withdraw contributions tax-free AND up to $10,000 of earnings tax-free if your Roth has been open for at least 5 years. You'll need to report the withdrawal on Form 8606 to document that it's a qualified distribution. The Form 5498 from 2022 is important because it officially documents how much you contributed, which helps determine how much of your withdrawal is contributions (always tax-free) versus earnings (which may be taxable depending on circumstances).

I went through this exact same situation last year and found this amazing service called taxr.ai (https://taxr.ai) that really helped me sort through my Roth IRA withdrawal confusion. I was totally lost trying to figure out what forms I needed and how to report my withdrawal properly. The tool analyzed my tax documents and helped me understand exactly what I needed to do with Form 8606 to report my Roth withdrawal properly. It even helped me locate my missing Form 5498 information by suggesting where to look on my account statements. They guided me through confirming that my withdrawal qualified as a first-time homebuyer exception too, which saved me a ton of stress. Their document analysis caught things I would have definitely missed on my own, especially with all the Roth IRA distribution rules. Highly recommend checking it out!

Update: I tried taxr.ai after seeing the recommendation here and wow - it was exactly what I needed! I was really confused about my Roth distribution for a home purchase, but their system walked me through everything step by step. I uploaded my 1099-R from my withdrawal and it immediately flagged that I needed to report it properly to avoid taxes. The best part was when it helped me track down my contribution history even though I couldn't find my original Form 5498s. The service explained exactly how to fill out Form 8606 to show my qualified distribution for the home purchase. Saved me hours of stress and probably prevented a costly mistake. Definitely worth checking out if you're dealing with Roth IRA withdrawal questions!

If you're having trouble getting your old 5498 forms or contribution records from your IRA custodian, try Claimyr (https://claimyr.com) to get through to the IRS directly. I was in a similar situation last year where I needed verification of my Roth contribution history, and my financial institution was taking forever to respond. After waiting on hold with the IRS for hours over multiple days with no luck, I tried Claimyr and had an actual IRS rep on the phone within 45 minutes! They have this crazy system that somehow gets you past the usual IRS hold times. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent was able to pull up my 5498 history and confirm my contribution amounts, which saved me tons of time and stress while preparing my taxes with the home purchase withdrawal.

Well I owe everyone an apology, especially Profile 19. I called the Claimyr service a scam, but I was desperate enough to try it after spending 4 hours on hold with the IRS yesterday trying to get my Roth contribution records. I'm honestly shocked - it actually worked exactly as described. I got a call back in about 35 minutes connecting me directly to an IRS representative who pulled up all my 5498 forms from the last 5 years. The agent confirmed my contribution amounts for each year, which was exactly what I needed for reporting my Roth withdrawal for my home purchase. I've never been able to get through to the IRS without multiple attempts and hours of waiting. This saved me so much frustration. Just wanted to come back and correct myself since it legitimately solved my problem.

Quick tip for the future - you should definitely keep a separate spreadsheet tracking all your Roth IRA contributions by year. I've been doing this for 10 years and it's been a lifesaver multiple times. Makes it super easy to know your basis when you need to make withdrawals!

I'm confused about something - if Form 5498 is sent to us and the IRS, why do we need to report anything about Roth IRA contributions or withdrawals at all? Doesn't the IRS already have all this info?

Great question about Form 5498! Just to add some clarity - you should also make sure you understand the timing of when you can access different parts of your Roth IRA. Since you mentioned putting money in at the beginning of 2022 and withdrawing near the end of 2023, you're well within the safe zone for contribution withdrawals. For future reference, contributions can always be withdrawn tax and penalty-free at any time since you already paid taxes on that money. But earnings are a different story - they need to meet both the 5-year rule AND a qualifying reason (like your first-time home purchase) to avoid taxes and penalties. One thing to double-check: make sure your withdrawal amount doesn't exceed your total contributions. If you withdrew more than you contributed, the excess would be considered earnings and you'll need to verify it qualifies under the first-time homebuyer exception. Your Form 1099-R from the withdrawal should show the total amount you took out, which you can compare against your contribution history from those 5498 forms.