Not Reporting The Fair Market Value to Your Custodian
Likely the worst thing that can happen to you if you don’t report the fair market value of your IRA assets to your custodian is that they may charge you a fee. Now the funny thing about this fee is that there is no real cost to a custodian for not receiving your valuation.
They will just report the last known value of your IRA to the IRS and to you on the annual Form 5498. The IRS currently does not issue fines or even bother sending nasty grams to people to who have not updated their annual fair market value of their IRAs. For 401(k)s, this is different. If you’re required to file an annual Form 5500 (other than 5500 EZ), and you don’t, the fine for this can be as high as $250 a day up to $150,000 until you do file. I know, this might seem high. The reason for that is that this is the same fee that large corporations must pay and the fine needs to be high enough to get people’s attention.