How to Report IRA Fair Market Value on Your Tax Return

You don’t enter your IRA’s fair market value anywhere on your Form 1040. Your custodian reports that number to the IRS on Form 5498, Box 5, as of December 31 each year, and you keep the form for your records. The FMV only matters on your tax return indirectly: it sets the denominator for your Required Minimum Distribution and, if you have any after-tax contributions in a traditional IRA, it drives the pro-rata calculation on Form 8606. So the short answer to how to report IRA fair market value on your tax return is that you don’t report it, but you do need to know what it is and check that the custodian got it right.

Where the FMV Actually Gets Reported

Form 5498 is filed by your IRA custodian, not by you. The custodian sends a copy to the IRS and a copy to you. Box 5 shows the total value of everything in the account on December 31 of the reporting year.¹

The timing is different from the January tax forms you may be used to. Your custodian has to send you an FMV statement by January 31, but the full Form 5498 does not have to reach you until May 31, and the IRS deadline is June 1.² The delay exists because you can make prior-year IRA contributions up to the April filing deadline, and the form needs to capture them.

A few other boxes on Form 5498 matter if you are near or past RMD age. Box 11 is a checkbox flagging that you must take an RMD for the following year. Box 12a shows the deadline, and Box 12b shows the calculated amount.¹ An unchecked Box 11 is not a free pass; the form itself warns that you may still owe an RMD.

If your IRA holds assets that aren’t publicly traded, such as real estate, private company stock, or partnership interests, the custodian also fills in Box 15a with the FMV of those assets and Box 15b with a letter code identifying what they are.¹ Roth IRAs also get a Form 5498 with an FMV in Box 5, even though Roth distributions are generally tax-free.

What Does Flow onto Your Form 1040

What you actually report on your return is distributions, not value. When you take money out of an IRA, the custodian issues Form 1099-R by January 31 of the following year.³ Box 1 shows the gross distribution, and Box 2a shows the taxable amount.⁴

Those figures go on lines 4a and 4b of your Form 1040. Line 4a captures the total distribution, and line 4b captures the taxable portion.⁵ If your traditional IRA was funded entirely with pre-tax contributions, the full distribution is taxable, and the FMV on Form 5498 has no direct role in computing the tax. The amount you withdrew is the amount you owe tax on, and the taxable portion lands in your adjusted gross income, which can ripple into Medicare premium surcharges, the taxability of Social Security benefits, and various credits.

How the FMV Drives Your RMD

The December 31 FMV from the prior year is the starting number for your current-year Required Minimum Distribution. You divide that FMV by a life expectancy factor from the IRS Uniform Lifetime Table, or the Joint and Last Survivor Table if your sole beneficiary is a spouse more than 10 years younger. The result is the minimum you must withdraw during the year.

RMDs generally begin the year you turn 73.⁶ That age moves to 75 starting in 2033 under the SECURE 2.0 Act. If you own more than one traditional IRA, you calculate the RMD separately for each account but can take the total from any one of them or any combination. You can’t satisfy a traditional IRA RMD by withdrawing from a Roth IRA or a workplace plan.

Missing an RMD triggers a 25% excise tax on the shortfall.⁷ If you catch the mistake within two years, take the missed amount, and file the right paperwork, the penalty drops to 10%.⁸ This is where an incorrect FMV becomes a real problem. A value reported too low produces a smaller calculated RMD than the IRS expects, which can trigger the penalty without any deliberate mistake on your part.

The Pro-Rata Rule and Form 8606

If you have ever made non-deductible (after-tax) contributions to a traditional IRA, the FMV reported on Form 5498 feeds directly into your tax calculation through Form 8606. You can’t simply pull out just the after-tax dollars tax-free. The IRS treats every dollar coming out of your traditional IRAs as a proportional mix of pre-tax and after-tax money.

You file Form 8606 with your Form 1040 for any year you take a distribution from a traditional IRA that contains after-tax basis, make a non-deductible contribution, or convert to a Roth IRA.⁹ The form uses the combined year-end FMV of all your traditional, SEP, and SIMPLE IRAs, plus any outstanding rollovers and distributions taken during the year.¹⁰ The IRS aggregates everything; you can’t isolate the after-tax money in one account.

A simplified example makes the mechanics clear. Say you have $10,000 in after-tax basis across your traditional IRAs, and the combined year-end FMV of all of them is $85,000. During the year you took a $5,000 distribution, bringing the denominator to $90,000. Your tax-free ratio is $10,000 ÷ $90,000, or roughly 11%. About $556 of your $5,000 distribution is tax-free; the remaining $4,444 is taxable.

Skipping Form 8606 when it’s required carries a $50 penalty, but the bigger cost is losing the documentation of your basis. Without the form, the IRS treats the full distribution as taxable, so you’d pay income tax a second time on money that was already taxed when you contributed it.¹⁰ An FMV reported too high inflates the denominator and shrinks the tax-free share of your distribution. An FMV reported too low does the reverse and may understate the tax you owe.

What to Do if the FMV on Form 5498 Looks Wrong

You can’t correct Form 5498 yourself. Only the custodian or trustee can file a corrected version with the IRS, and the IRS instructs custodians to make corrections “as soon as possible” once an error is identified.²

Contact the custodian in writing, explain the discrepancy, and ask for a corrected Form 5498. Keep a copy of your correspondence. If the error caused you to withdraw less than your true RMD, take the additional distribution right away. Correcting the shortfall within the two-year window reduces the excise tax from 25% to 10%.⁷

If you have already filed your return using the wrong FMV, you may need to amend with Form 1040-X once the corrected Form 5498 arrives. The longer an error sits uncorrected, the more it compounds. One wrong FMV can throw off the RMD calculation and the pro-rata ratio for later years as well.

Inherited IRAs Follow Different Rules

If you inherited the IRA rather than own it, the reporting mechanics for FMV are the same, but the downstream rules change. The custodian issues Form 5498 in the beneficiary’s name with the year-end FMV in Box 5, and distributions you take appear on Form 1099-R with code “4” in Box 7, identifying the payment as a death benefit.⁴ Distributions from an inherited traditional IRA are almost always fully taxable to the beneficiary as ordinary income.

For most non-spouse beneficiaries when the original owner died after 2019, the account must be emptied by December 31 of the 10th year following the owner’s death.¹¹ If the owner had already started taking RMDs, the beneficiary must also take annual RMDs during the 10-year window, a requirement confirmed by IRS final regulations effective for 2025.¹² Those annual RMDs use the prior-year December 31 FMV in the same way an original owner’s RMD does.

1
Internal Revenue Service. Form 5498
2
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
3
Internal Revenue Service. General Instructions for Certain Information Returns (2025)
4
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
5
Internal Revenue Service. 2025 Instructions for Form 1040
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Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
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Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
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Internal Revenue Service. About Form 8606, Nondeductible IRAs
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Internal Revenue Service. Instructions for Form 8606 (2025)
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Internal Revenue Service. Retirement Topics – Beneficiary
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Federal Register. Required Minimum Distributions