Pub. 11 2021-2022 Issue 3-1

coloradobankers.org 10 By Lisa Walker, CISP, CHSP, Ascensus Why, When and How P art of maintaining a compliant IRA program is to amend your IRA documents when required. And with new IRA model documents promised “soon” by the IRS, you likely will have to amend in the near future. In fact, IRS Notice 2020-68, issued in Sept. 2020, states that IRA trustees, custodians, and issuers must amend their IRA plan agreements for the Setting Every Community Up for Retirement Enhancement (SECURE) Act by Dec. 31, 2022, or a later date as prescribed by the Treasury Secretary. But what does it mean to amend? Why do you have to amend your IRA documents, and when? How do you do it? Knowing the answers to those questions is helpful, but taking on the task may seem overwhelming. Fortunately, document providers, like Ascensus, can help you through the amendment process. WHY AMEND An amendment to your IRA documents is often necessary when a significant tax law is enacted that affects IRAs. It may be needed for both a plan agreement and a disclosure statement, or just the disclosure statement. The IRS often releases guidance, usually in the form of a revenue procedure, specifying that an amendment is required and when the amendment must be completed. If the IRS does not release guidance, but changes to the IRA rules affect your documents, amending the disclosure statement is often required. New legislation and rule changes aren’t the only reasons for amending IRAs. Changes in ownership of your organization may trigger some form of an amendment to the plan documents. Another reason is if your financial organization decides to use a different IRA document. In this situation, your financial organization should review the IRA documents it currently uses and the new documents. In some cases, your organization may simply start using the new documents. In others, it may need to notify IRA owners of specific document changes. If your organization fails to amend or does not amend timely, it faces potential penalties from the IRS. Not providing a required plan agreement or disclosure statement amendment to an IRA owner could cost your organization $50 per failure (as much as $100 per IRA if both the plan agreement and disclosure statement are required to be amended). In addition, not amending puts your organization and clients at risk for errors and negative tax consequences because of noncompliant documents and outdated information. WHEN TO AMEND • Plan Agreement Amending an IRA plan agreement for law changes depends on Amending IRA Documents: