IRS Proposes New Form to Track Basis in Trump Accounts

One little-discussed feature of the new Trump account program is how child-beneficiaries will keep track of their account basis. Tracking basis--or after-tax investment in the account--is important to ensure that the funds aren't being taxed twice. It's very likely that Trump accounts will contain both pre-tax and after-tax dollars. The IRS has recognized that it will be incredibly difficult for these children to independently track their account basis over time. In response, the IRS has proposed a new Form 5498-TA (and is soliciting comments on the proposed form). Typically, IRA custodians send Form 5498 to IRA holders with documentation regarding their contributions for the year. The new form will serve the same purpose for Trump accounts. Box 5 of the new Form 5498-TA is labeled "basis or investment in the contract". The form would also report contributions, rollovers and the fair market value of the account for the year. For more information on the rules governing IRA account basis, visit Tax Facts Online. See Q 3672