Insights
Who Does What in IRA Tax Reporting
Jan 20, 2026 | Read time: 4 minutes
A simple guide to the roles of your advisor, tax professional, custodian, and you
As we approach tax‑filing season, many Americans are looking for support in navigating increasingly complex financial decisions. Recent research shows that only 16% of Americans feel they have “A‑level” tax management skills, while 42% rate themselves a “C” or below.¹ The top areas where people seek professional guidance include retirement planning, tax preparation, and building tax‑efficient investment portfolios—underscoring the essential role financial professionals play in helping clients feel informed and confident.
For those exploring broader diversification, self‑directed IRAs (SDIRAs) offer access to alternative investments such as real estate, private equity, promissory notes, and precious metals, all within a tax‑advantaged account. But with these expanded opportunities come distinct administrative requirements and tax‑reporting responsibilities that differ from traditional brokerage IRAs. A little preparation goes a long way during tax season, especially with SDIRAs. When clients understand what their IRA custodian is responsible for and what information they must provide themselves, they’re much better equipped to stay on track with annual documentation, fair market value (FMV) submissions, and IRS reporting requirements. Advisors play a key role in helping clients feel ready, supported, and confident every step of the way.
How a custodian supports the SDIRA process
A self-directed IRA custodian does not provide investment advice. The custodian’s role is administrative and compliance-focused. They open and maintain accounts, process transactions, and produce required reporting so the IRA remains in good standing. For investors, this means timely processing and accurate documentation. For financial professionals, it means reliable execution and consistent records that support planning conversations. Key ways a custodian supports advisors and investors include:
- Account setup and funding - Guiding paperwork for rollovers, transfers, and contributions, and coordinating with counterparties.
- Transaction processing - Executing investment direction instructions once documentation is complete.
- Asset custody - Ensuring the titling of assets is in the IRA’s name and maintaining proper records.
- Required tax forms - Issuing Form 1099-R for reportable distributions and Form 5498 for contributions and fair market value reporting.
Annual fair market value reporting - Recieving and recording FMVs for alternative assets for year-end statements and IRS reporting.
How IRA tax reporting responsibilities are shared
Clear role definitions help prevent delays and avoid compliance issues. The table below summarizes typical responsibilities at a high level, including FMV-related tasks.
| Responsibility | Financial advisor | Tax professional | Custodian | Investor |
|---|---|---|---|---|
| Retirement and investment strategy | Guides overall strategy and timing | Informed | Not involved | Provides goals and financial context |
| Investment selection and due diligence | Supports evaluation and planning | Consulted | Not involved | Makes final investment decisions |
| IRA account setup and maintenance | Informed | Informed | Opens and services the IRA account | Authorizes account activity |
| Processing contributions, rollovers, and distributions | Coordinates timing | Informed | Processes transactions | Initiates and approves |
| Titling and custody of IRA assets | Informed | Informed | Verifies correct titling and records assets for benefit of (FBO) the IRA | Reviews documentation |
| Issuing IRS Forms 1099-R and 5498 | Informed | Uses for Tax Return preparation | Prepares and files | Receives and reviews |
| Fair market value reporting | Reminds and coordinates | Uses for reporting | Recieves and reports | Ensures annual fair market value is submitted from the investment sponsor or qualified third party (if needed). |
| Personal tax return preparation | Informed | Prepares and files | Not involved | Provides complete information |
| Tax strategy and compliance advice | Not provided | Provides advice | Not provided | Engages qualified professionals for tax guidance as needed |
When to involve specialized professionals
Certain SDIRA transactions involve legal, tax, or valuation considerations that require professional judgment. Clients benefit from engaging qualified tax, legal, and valuation professionals whenever decisions extend beyond general education. This collaborative approach supports accurate reporting and preserves the IRA’s tax-advantaged status.
Here to support your SDIRA journey
As tax season approaches, clients rely on their financial professionals more than ever. Clear role alignment between advisors, tax professionals, custodians, and investors creates a strong foundation for confident decision-making. At STRATA, we support both investors and financial professionals by delivering accurate SDIRA administration and reliable reporting. By keeping account records precise and accessible, we help your entire financial team stay focused on what matters most, long-term retirement success.
1Edelman Financial Engines survey of 1,500 individuals at least 30 years old.
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