IRA document amendment solutions
Understanding when to amend IRA documents is not always easy. We’re here to help.
Ascensus closely watches for law changes that affect IRAs. When amendments are required or recommended, we’ll help you stay compliant by guiding you through the amendment process.
Revised model IRA documents, once available, will fulfill the IRS requirement to amend existing IRAs for recent legislation. Unfortunately, the IRS has not provided indication as to when new models will be available. Therefore, until then, Ascensus recommends amending existing IRAs with a disclosure statement amendment for current changes as a result of the Further Consolidated Appropriations Act, Setting Every Community Up for Retirement Enhancement (SECURE), and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
What Needs Amending?
Amendments or new plan agreements and disclosure statements capture IRA rule changes, keeping IRAs up to date with the latest laws and regulations. Typically, the IRA plan agreement and the disclosure statement may need to be amended when major tax laws cause a material change in IRA documentation. The financial disclosure is never amended.
Knowing why, when, and how to amend your IRA documents is important. Noncompliant documents and outdated information could lead to negative tax consequences for your clients and penalties for your financial organization.
Legislation throughout 2020 made some significant changes to IRA rules. New IRAs require disclosure statements that are up to date at the time of establishment. Amendments to existing IRAs are only required when the IRS mandates it, but many financial organizations update existing IRAs as a best practice without that mandate – or if there is a significant gap in timing of when a required, complete plan agreement and disclosure statement amendment is available to be sent to account owners. They do this so that their IRA owners know how their accounts are governed. In general, Ascensus strongly recommends amending existing IRAs for significant legislative and regulatory events. IRS Notice 2020-68 provides guidance on certain provisions of the SECURE Act, including a requirement for financial organizations to amend their IRA plan agreements and disclosure statements for SECURE by December 31, 2022, or a later date as prescribed by the Treasury Secretary. The IRS expects to issue revised model IRA documents; however, the Notice did not indicate when new models will be available. We also believe additional guidance is coming to clarify other provisions of the law changes, but the IRS has not indicated when that guidance will be released.