Confirm Your Reporting Options Page 2. Communicating with Your Data Processor Page 2. Transmission Receipt Deadlines Page 2. Deadlines Alert Page 3

Transcription

1 Tax Year 2017 Transmission Requirements for Fully-Administered Clients April and May 5498 Reporting This communication provides your financial organization with information about the transmission requirements that must be met when preparing and sending tax reporting files to Ascensus for Traditional, Roth, and SIMPLE IRAs, Coverdell education savings accounts (ESAs), and health savings accounts (HSAs). In addition to reading this communication, your IT staff or external data processor (as applicable) should refer to IRS Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G, for complete details about tax year 2017 reporting changes and IRS 750 Format requirements. Contents Confirm Your Reporting Options Page 2 Communicating with Your Data Processor Page 2 Transmission Receipt Deadlines Page 2 Deadlines Alert Page 3 File Content Requirements Pages 3 4 Beneficiary Accounts Page 4 Transmission Requirements Page 5 No Tax Data to Report for 2017 or Data in IRAdirect is Already Correct? Page 6 Ascensus Standards Page 7 Fees for Non-Compliance Page 7 Common File Problems and How to Prevent Them Page 8 Questions Page 8 1

2 Confirm Your Reporting Options Confirm your financial organization s reporting option for each account type by taking these steps. 1. Click your financial organization s name in the upper right corner of the IRAdirect homepage. 2. Click the Reporting tab. If your reporting option is Transmission for 5498-ESA, 5498, or 5498-SA, you will see TRANSMISSION in the Reporting Option field for that tax form type. Communicating with Your Data Processor Compliance with these requirements by your IT staff or external data processor will help to ensure a smooth tax year 2017 reporting season. Failure to comply with these requirements may result in problems that negatively affect both your financial organization and your account owners, as outlined below. Information in the wrong fields in your file, resulting in incorrect tax forms or our inability to process your information Delays in processing your information, resulting in the mailing of tax forms after the IRS deadlines Duplicate reporting to the IRS, resulting in account owners having to respond to IRS letters and potential audits Multiple transaction errors that cause tax form production delays or no reporting, resulting in the assessment of IRS penalties If your tax reporting files are prepared by your IT department or another third-party administrator, provide them with a copy of this communication. If your tax reporting files are created and transmitted to us by an external data processor, please contact your processor to confirm that they will be preparing and transmitting tax reporting information to Ascensus and are aware of our file receipt deadlines. Data processors on our contact list were sent a specific version of these requirements by and have access to the requirements through the Upload Tax Files link on the IRAdirect homepage. If your processor did not receive our requirements, please have them contact our File Processing staff at , suboption 2, suboption 2, suboption 4. Transmission Receipt Deadlines File Type Due to Ascensus 5498-ESA Production File April 20, Production File May 8, SA Production File May 8,

3 Deadlines Alert If your tax files are transmitted to Ascensus by your IT department, it s crucial that you meet the deadlines stipulated above. If you miss the deadlines, Ascensus cannot guarantee that your financial organization s information will be reported to account owners or transmitted to the IRS by the IRS deadlines. Because the IRS is more vigilant than ever about tracking tax information receipt and assessing penalties to financial organizations that report late, you must adhere to these deadlines. Ascensus tracks and documents the dates that tax files are received. If the IRS assesses a penalty for late reporting, we can confirm the date the file was received at Ascensus. Please take these deadlines seriously. Late file submission could not only result in your financial organization incurring an IRS late reporting penalty, but Ascensus may assess a $100 late fee, as well. File Content Requirements Information due April 20, ESA File for Coverdell ESAs The transmitted file must include the following information, as applicable. Regular contributions (Including regular contributions made between January 1 and December 31, 2017, and regular contributions made between January 1 and April 17, 2018, for 2017) Rollover/transfer contributions Information due May 8, File for Traditional, Roth, and SIMPLE IRAs The transmitted file must include the following information, as applicable. FMVs (December 31, 2017, ending balances) for all IRAs Regular contributions for Traditional and Roth IRAs (Including regular contributions made between January 1 and December 31, 2017, and regular contributions made between January 1 and April 17, 2018, for 2017) SEP contributions for Traditional IRAs (made during 2017) SIMPLE IRA contributions (received in 2017) Rollover contributions for all IRAs Recharacterizations for Traditional and Roth IRAs Roth conversions Self-certified late rollover contributions Postponed contributions 3

4 Information due May 8, SA File for HSAs The transmitted file must include the following information, as applicable. FMVs (December 31, 2017, ending balances) Regular contributions (made between January 1 and December 31, 2017, and those contributions made in 2017 for 2016) Prior-year contributions (contributions made between January 1 and April 17, 2018, for 2017)* Rollover contributions *HSA prior-year contributions must be reported separately from regular contributions. Beneficiary Accounts Reporting FMVs for Owners with a Contributory IRA and an Inherited IRA Account owners often have two IRAs with your financial organization: an IRA that accepts contributions and an IRA for assets received as a beneficiary, also known as an inherited IRA. Ascensus often sees errors in these files when the transmitted file has an FMV for the account owner s inherited IRA, and an FMV for the account owner s contributory IRA, and both incoming accounts have the same identifying information. If Ascensus cannot determine which FMV should be applied to the inherited IRA and which should be applied to the contributory IRA, the FMVs in the transmission file will be combined and applied to the first open account listed in IRAdirect for the applicable account owner. To apply the correct values to the correct accounts, your FMV file must include the following. The phrase As Bene of must be entered in the Second Name Payee Line of the account owner s B record for the inherited IRA. (The original deceased account owner s name is entered after the phrase As Bene of.) The account number for the inherited IRA in IRAdirect must match the exact account number listed for the applicable inherited IRA in your file. If the amounts are combined and applied to the first open account listed in IRAdirect and your organization does not correct the information on the account owner tree before tax forms are produced, incorrect tax reporting will occur. Your organization will be responsible for making the applicable corrections and may be subject to IRS penalties for incorrect tax reporting. 4

5 Transmission Requirements Review the following requirements for submitting tax year 2017 data on a transmission file. The only acceptable format for transmissions is standard IRS 750 Format. If you attempt to upload a file with a restricted extension because the file is not in IRS 750 Format, you will receive an error message. Files with these extensions will be rejected:.pdf,.xls,.xlsx,.doc,.docx,.tif,.gif,.jpg,.bmp,.html,.exe,.pl,.php,.vbs,.asp,.jsb,.jsp,.bat, or.zip. We will also reject files with any of the following symbols in the extension: ( ; { } ) : We do not accept zipped (compressed) files. If you attempt to upload a zipped file, you will receive an Upload Error alert about an invalid file type. Because the file has been rejected, an unzipped replacement file must be uploaded. Uploaded files must not be password-protected. Upload each file separately. If the file you will be submitting contains more than one IRA type, and the file contains a separate A Record for each IRA type, one complete file per transmission is allowed. Example: If you are submitting Form 5498, 5498-ESA, and 5498-SA information in the same file, all records can be included in that file. It is not necessary to upload three separate files. 5

6 No Tax Data to Report for 2017 or Data in IRAdirect is Already Correct? If you have nothing to report for a particular account type, or you know the information already in IRAdirect is current and correct and you have nothing new to add, there is no need for your IT staff to transmit a file. But there is a way for you to document your nothing to report status so you won t receive a reminder . Checking a box in this section indicates that rather than submitting your organization s tax information by the Transmission reporting option, Ascensus will complete tax reporting based solely on the information your organization enters and saves in IRAdirect for the selected account type. If no tax data is saved in IRAdirect, no reporting for the specific account type will occur for the tax year. Example: None of your ESA designated beneficiaries had contributions for tax year 2017, so there is no need to transmit a 5498-ESA file to Ascensus with no information (no B Records). Example: All FMV and contribution information for your organization s Traditional and Roth IRAs is already in IRAdirect. You know the information is complete and correct, and you have nothing new to report. Thus, you want us to use the information already in IRAdirect to produce your organization s Forms Instead of uploading a file to Ascensus in these instances, take the following steps to let us know that you have no additional data to report for a specific account type. (You must be an Advanced User.) 1. Click your financial organization s name in the upper right corner of the IRAdirect homepage. 2. Click the Reporting tab. 3. Scroll to the No Additional Data to Report for Tax Year 2017 section near the bottom of the page. 4. Scroll to the We have no additional FMVs/contributions (5498) to report for: row and check the applicable check box: Traditional and/or Roth IRAs, Coverdell ESAs, or HSAs. 5. Click the Save button. Saving the transaction moves a date into the applicable Date Information Received and Date Information Processed fields on the Reporting page and removes the red alert message on the IRAdirect homepage. Processing Alert: If you make a mistake and click the Save button, you must contact the IRA Call Center at to have your IRAdirect no additional tax data to report entry deleted or corrected. 6

7 Ascensus Standards Account Numbers In B record field positions in your transmission, you may insert alpha/numeric account numbers for each record, up to 20 characters. Each record must contain a unique account number. Do not change existing account numbers, as the account numbers submitted must match those on our system. TCC (Transmitter Control Code) If your programming requires that you enter a TCC or Transmitter Control Code, fill that field with Ascensus is required to use its own TCC when we file with the IRS on behalf of our clients, so your TCC is not required. Viruses All incoming transmissions are checked for viruses. Files found to have a virus will not be accepted. It is your responsibility to ensure that what you transmit is virus free. Report at the Plan Level Reporting must be at the plan level. Example: An IRA includes all investments under one IRA plan. Do not file a Form 5498 for each investment under one plan. Thus, if an IRA owner has three Certificates of Deposit under one IRA plan, only one Form 5498 is required for all contributions and the FMVs of the certificates under that plan. However, if an individual has established more than one IRA plan with the same trustee, a separate Form 5498 must be filed for each plan. The same is true for Coverdell ESAs and HSAs. Fees for Non-Compliance You may be billed a $100 Ascensus Processing Issue Fee for each instance if any of the following situations occur. You submit a file that cannot be successfully processed because it is not in the required standard IRS 750 Format. Your file requires manual intervention before it can be applied, due to lack of compliance with our requirements. You submit information on a CD or diskette, instead of transmitting it. We do not accept magnetic media. If you send us hard media, we will contact you and request the information by transmission, but the CD or diskette you submit will not be returned. Your media will be stored in a locked container and destroyed at the end of the tax reporting season. If your file is not received by our deadline for that file type, you may be billed a $100 Late Receipt fee. The fee could be charged for each file type received after the communicated deadline. 7

8 Common File Problems and How to Prevent Them The Problem Missing Account Type Indicators The Requirement Your file must contain account type indicators that identify the account type. For example, for Traditional IRAs, enter 1 in field position 547 of the B Record. For Roth IRAs, enter 1 in field position 550 of the B Record. Incorrect Tax Year If the tax year provided in your file is incorrect, the file will fail our edits. Ensure that the tax year provided in your transmission is Incorrect Format We are not looking for financial organization reports in your file. You must provide the tax information for each account in the file in IRS 750 Format, where each record is 750 characters in length. These requirements are outlined in IRS Publication Submitting Files Through the Wrong Transmission Link Click the Upload Tax Files link to submit tax files. Do not click the Transfer Files link to transmit tax files. Pay attention to the selections in IRAdirect and ensure that you click the correct radio button under the Upload Tax Files link to submit tax data. Multiple Files in Transmission Only one type of reporting must be on the file. For example, do not provide Form1099-R information (withdrawals) and Form 5498 information (contributions) in the same transmission. If you submit a file this way, a processing fee will be charged because we must take extra steps to apply the file manually. Questions If you have questions about these requirements or the preparation of your files, please contact our File Processing staff at , suboption 2, suboption 2, suboption 4. Ascensus and the Ascensus logo are registered trademarks of Ascensus, LLC. IRAdirect is a registered trademark of Ascensus, LLC. Copyright 2018 Ascensus, LLC. All Rights Reserved. 8