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#52133 - 01/03/03 07:46 PM IRA Year End Statement
Peepers Offline
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Joined: Jul 2002
Posts: 13,994
Thought I would post this here while I check on this myself. Maybe this has come up for someone else.

We send our IRA Fair Market Value statements to a mailing service. Our marketing department wants to include a flier that mentions the new contribution limits to attract more business.

Does anyone know if this is not allowed because it's included with a tax form?

I thought I read or heard that this can't be done with 1099 forms. I wasn't sure if this applied to 5498 forms as well.

Our forms are in lieu of 5498 forms. They are on letter size paper which discloses the rate on their IRA and the interest earned. It then discloses certain things that are reported to the IRS, ie. contributions, rollovers, FMV. These forms are theirs to keep, they don't send these to the IRS. I don't know if the format of this has any relevance or not.
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#52134 - 01/03/03 08:15 PM Re: IRA Year End Statement
Peepers Offline
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Nevermind, I found my answer.

Page 9 of the IRS general instructions states that no promotional material or advertisements are allowed on 1099, 1098, 5498 or W-2G forms.
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#52135 - 01/03/03 08:31 PM Re: IRA Year End Statement
rlcarey Online
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rlcarey
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Posts: 78,605
Galveston, TX
I'm not sure where you found that. If you go to page 12, as John B so graciously pointed out yesterday, it would appear that you can include other information in selected information returns, including a 5498. Take a look:

IRS Instructions
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#52136 - 01/03/03 09:39 PM Re: IRA Year End Statement
MrHawaii Offline
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Joined: Nov 2002
Posts: 154
I'm sorry, I'm blind. Page 12 of the PDF file of Page 12 of the publication? I'm still just seeing the paragraph that says that any promotional material is prohibited.

Brian
American Savings Bank

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#52137 - 01/03/03 09:49 PM Re: IRA Year End Statement
Elwood P. Dowd Offline
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Elwood P. Dowd
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Posts: 21,939
Next to Harvey
You are O.K. for the reason that rlcarey mentioned (it was news to me that you could include any general information with a customer copy of an information return). You are doubly O.K. because the IRA's year end statement is not an information return, even if you use a 5498 for that purpose. It has no formatting requirements other than the use of a special legend if you use it in lieu of a 5498.

While you are at it, I would suggest you include some additional information with the annual statement. IRS Notice 2002-27 requires that, beginning in 2003, IRA participants with a required minimum distribution receive a notice from the custodian telling them the amount of the RMD (or how it can be obtained) and when it must be withdrawn. Like the year end statement, the notice is to be sent by January 31. Also, for as long as I can remember, you have been required to send an annual notice to IRA holders in distribution (mandatory or otherwise) regarding withholding on distributions. (There is no specific date by which this notice must be sent.)

For IRA holders in required distribution, custodians might as well combine the annual statement, RMD notice and withholding notice into a single comprehensive piece of communication. Touting the increased contribution amounts and the increased availability of deductible contributions in an enclosure would be a natural.
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#52138 - 01/03/03 09:50 PM Re: IRA Year End Statement
rlcarey Online
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rlcarey
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Galveston, TX
Page 12 of the PDF, second to last paragraph, left hand column that starts with: "Except for royalties.........
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#52139 - 01/03/03 10:29 PM Re: IRA Year End Statement
Peepers Offline
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OK, I see what you're talking about. I called the IRS and they quoted the paragraph I mentioned on page 9. I saw this and accepted it but now I see that I should have read the information prior to that.

Thanks for the input everyone. I'm calling the IRS again on Monday and see if they can clear this up. Past experience tells me that I will get a different answer from a different person. No offense to any IRS employees who may be reading this.
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#52140 - 01/05/03 01:35 PM Re: IRA Year End Statement
Elwood P. Dowd Offline
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Elwood P. Dowd
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Next to Harvey
I encourage people to rely on their own reading skills rather than nonbinding telephone advice from the IRS. According to the last information I saw, GAO indicated that IRS personnel gave the correct response 70% of the time on routine tax questions. Questions on information reporting are not "routine," so I would say the probability of a correct answer is less than that if you call the 800 number.

However, if you call the IRS' Martinsburg Computer Center at 304-263-8700, the person answering the question will be an information reporting specialist. These folks are knowlegeable, helpful and return phone calls. My personal theory has always been that they have never been told who they work for.

Not to belabor the point, but your original question dealt with enclosures in an annual statement. An annual statement is not the equivalent of an information return, any possible limitation on enclosures does not apply.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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#52141 - 01/29/03 03:22 PM Re: IRA Year End Statement
DeeQ Offline
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DeeQ
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Posts: 40,762
Turnpike Exit 10
If you are not including promotional materials, it is OK,
if you are telling people about the new rules, it's good
and it's commendable.
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Get your facts first, then you can distort them as you please. - Mark Twain

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