The IRS requires an annual valuation of all retirement accounts. The FMV is the total dollar value of assets within the account at year end. IRS Form 5498 is used for IRAs and Form-5500 is used for individual 401(k)s. At Rocket Dollar, you know your investment best.
Using the investment tracker inside the Rocket Dollar Customer Dashboard is easy. You can track the investment asset type name, cost basis, investment value, investment date, and investment gain.
Currently, the investment tracker is inputted manually. Over time, integrations will be connected to track your cash balance and common alternative investments automatically.
As you know your investments best, the compilation of values will need to start on the client side. Each and every investment should have a value attached to it based on an investor statement, market analysis, or partnership tax reporting form. These do not have to come from a third party and can be generated directly by the investment firm or partner you're working with. Ultimately, this should be a representation of the market price at which the asset would trade hands in an objective transaction.
Funds and private investments should receive an annual investor statement or tax reporting form such as a K1. If you have not received any written or electronic correspondence from the issuing company, we would encourage you to reach out to obtain an updated report immediately.
Real estate investments can be updated with a report from the county tax appraisal, comparable market analysis, or online valuation platform. If a tax reportable action is taking place, such as a Roth Conversion, is it imperative that a licensed appraisal is generated for the property.
Notes and other debt instruments are typically reported at the remaining principal balance. Depending on the legal agreement, there may be additional factors to consider.
When and how does the tax reporting need to happen?
The value reported to the IRS is as of December 31st for the tax year in question. Once gathered, these values are reported by Rocket Dollar and our custodian provider in January of the following year. It is imperative that these values are submitted in a timely fashion. Rocket Dollar’s valuation form can be found in the Investment Review section on your Dashboard.