The 5498 is the IRS record of money you put into a Coverdell ESA each year

Form 5498 is a document the financial institution holding your Coverdell ESA sends to you and the IRS every year. It reports how much money was deposited into the account during the tax year and the account's total value on December 31. You receive it by mail, usually in May, though the exact date varies by provider.

The form itself does not determine your taxes or trigger any action on your part. It is a record-keeping document. The IRS uses it to match against your tax return to make sure the contributions you claimed are accurate. You keep it with your tax records.

The 5498 is different from the 1099 forms you may receive from other accounts. A 1099 reports earnings and withdrawals. The 5498 reports only what went in and the balance at year-end.

Key Takeaways

  • Form 5498 shows the total amount deposited to your Coverdell ESA during the tax year and the account balance on December 31.
  • Your financial institution mails the 5498 to you and files it with the IRS, usually by May 31 of the following year.
  • You do not need to attach the 5498 to your tax return, but you should keep it with your records to verify your contributions.
  • The form reports contributions only, not earnings or withdrawals, so it does not show whether you took money out for may have access to education expenses.

What information appears on the 5498

The 5498 has several boxes. Box 2 shows the total contributions made to the account during the tax year. This includes money you deposited yourself and any money someone else deposited on your behalf (such as a grandparent or relative). Box 5 shows the account balance as of December 31 of that tax year.

Other boxes on the form may show rollover amounts, recharacterizations, or corrections from prior years. Most Coverdell accounts will have only boxes 2 and 5 filled in. If you see entries in other boxes, your financial institution's customer service can explain what they mean for your specific account.

The form also lists the account owner's name and Social Security number, the financial institution's name and tax ID, and the tax year to which the form applies.

Why you receive a 5498 and what to do with it

You receive the 5498 because the IRS requires financial institutions to report all contributions to tax-advantaged education accounts. The IRS cross-checks these reports against tax returns to catch misreported or excess contributions. If you claimed a contribution on your tax return that does not match the 5498, the IRS may send you a notice.

Keep the 5498 with your tax records for at least three years. You do not need to send it to the IRS or attach it to your return. If you file electronically, your tax software may ask you to enter the contribution amount from the 5498, but the form itself stays in your files.

If the 5498 shows an incorrect amount, contact your financial institution immediately. They can issue a corrected form (marked as a correction) and file it with the IRS. Do not ignore discrepancies.

The 5498 does not report withdrawals or earnings

A common source of confusion: the 5498 does not show money you took out of the account or the investment gains the account earned. It reports contributions only. If you withdrew $3,000 for tuition and the account earned $500 in interest, the 5498 will not mention either figure.

Withdrawals and earnings are reported on a different form, usually a 1099-Q, which your financial institution sends if you took money out during the year. The 1099-Q is what you use to determine whether a withdrawal was tax-free (because it was for may have access to education expenses) or taxable.

This separation can make tax time confusing. The 5498 tells the IRS you funded the account. The 1099-Q tells the IRS you used it. Both are needed for a complete picture.

Contribution limits and what the 5498 reveals

The annual contribution limit to a Coverdell ESA is $2,000 per beneficiary per year. If the 5498 shows contributions above that amount, you have an excess contribution. This triggers a tax penalty unless you withdraw the excess and any earnings on it by the tax filing deadline.

The 5498 does not calculate whether you have exceeded the limit across multiple accounts or multiple contributors. That is your responsibility. If you have two Coverdell accounts for the same child, or if both parents contributed, you must add up all contributions from all sources. If the total exceeds $2,000, you owe the penalty on the excess.

Some financial institutions will flag an excess contribution on the 5498 itself. Others will not. Either way, the burden is on you to catch it and correct it.

Corrected 5498 forms and what to do if yours is wrong

If your financial institution discovers an error after sending the original 5498, they will issue a corrected form, usually marked "CORRECTED" at the top. You will receive the corrected version by mail. Destroy or discard the original and use the corrected form for your records and tax filing.

If you discover the error yourself—for example, you know you deposited $2,500 but the 5498 shows $2,000—contact your financial institution's customer service. Provide documentation of the deposit (bank statement, canceled check, or transfer confirmation). Ask them to investigate and issue a corrected 5498 if the error is confirmed.

Do not file your tax return based on a 5498 you believe is wrong. Wait for the corrected form or for the institution to confirm the original was accurate. If you file and the IRS later matches your return against the 5498 and finds a mismatch, you will receive a notice and may owe penalties.

Frequently Asked Questions

Do I have to attach the 5498 to my tax return?

No. The 5498 is for your records only. You do not mail it to the IRS or attach it to your return. However, you should keep it with your tax documents in case the IRS asks you to verify your contributions later.

What if I did not receive a 5498?

Contact your financial institution. If you made contributions and they did not send a 5498, ask why. If the account had a zero balance and no contributions during the year, some institutions do not send a form. If you made contributions, you should receive one.

Can I use the 5498 to prove I made a contribution for tax purposes?

The 5498 is one form of proof, but your bank statement or deposit receipt is often stronger. The 5498 is the official IRS record, so if you need to show the IRS you contributed, the 5498 is what they will look for. Keep both.

If I withdraw money from the Coverdell, will it show on the 5498?

No. Withdrawals appear on the 1099-Q, not the 5498. The 5498 shows only what went into the account, not what came out.

What happens if the 5498 shows more than the $2,000 annual limit?

You have an excess contribution. You must withdraw the excess amount plus any earnings on it by the tax filing deadline (usually April 15 of the following year) to avoid a 6 percent penalty tax. Contact your financial institution to request a withdrawal and ask for a calculation of the earnings to include.