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Tax Resource Center

SEP and Simple IRAs Tax FAQs

Why doesn’t the amount shown on Form 5498 match the amount of my employer contributions and salary deferrals for my SEP IRA or SIMPLE IRA?

SEP and SIMPLE IRA contributions reported on Form 5498 were received in your account during the calendar year:

  • Box 8 reports employer and salary reduction contributions to a SEP.
  • Box 9 reports employer and salary reduction contributions to a SIMPLE.

It is an IRS requirement that all contributions to a SEP or SIMPLE IRA be reported on the Form 5498 for the year they are actually deposited to the account, regardless of the year for which they are intended. It is the SEP/SIMPLE IRA owner's responsibility to report to the IRS for the year in which the contribution should apply.

 

If I take a distribution from my SIMPLE IRA before age 59½, is there a penalty for early withdrawal?

Generally, distributions from any IRA before age 59½ are subject to a 10% IRS early withdrawal penalty unless an exception applies. If a distribution from a SIMPLE IRA is taken within two years of the date of your first contribution to the SIMPLE IRA, the distribution is subject to a 25% early withdrawal penalty instead of the 10% early withdrawal penalty. After two years, if the early withdrawal penalty still applies, it reverts back to 10%.

Distributions taken within the first two years of participation will be indicated with code S in Box 7 on your Form 1099-R.

See FAQs about Early Distribution Penalties.

 

 


At Thrivent Mutual Funds, we recommend you consult your tax advisor to make sure you’re getting the most out of your investments. Thrivent Mutual Funds and their representatives cannot provide legal or tax advice.