Pub. 11 2021-2022 Issue 3-1

November • December 2021 11 whether it’s a model document or a prototype. Treasury regulations require amendments to be completed no later than 30 days after the plan agreement amendment is adopted, or 30 days after the date the amendment becomes effective, whichever is later. IRS model plan agreements (e.g., Form 5305 series documents) satisfy the basic statutory requirements for IRAs and need only be amended after the IRS releases a new version of these forms and specifically requires amendments. Sometimes the IRS issues new forms but does not require amendments. If the IRS does require amendments, it will usually specify a deadline to amend, which often is later than the 30-day deadline prescribed by regulations. Prototype plan agreements generally must be amended after each major law change that affects IRAs. IR annuity endorsements generally require amending as indicated for IRA prototype plans. Prototype documents primarily are based on sample language provided by the IRS through its listing of required modifications (LRMs). The IRS periodically updates its LRMs, often accompanied with amendment guidance, for major law changes or after a series of changes has occurred. • Disclosure Statement Your organization is required to provide a current disclosure statement – the nontechnical explanation of the rules set forth in the plan agreement – to individuals when they open an IRA. Treasury regulations state that disclosure statements cannot contain language that creates a false or misleading understanding of the rules governing IRAs. Thus, disclosure statements generally must contain current IRA rules. Further, a disclosure statement amendment is required when a plan agreement is amended if the changes to the plan agreement affect the disclosure statement information. If the IRS requires that plan agreements be amended, then disclosure statements generally must be amended at the same time. Unless the IRS provides guidance for a specific amendment event, disclosure statement amendments must be completed 30 days after the plan agreement amendment is adopted or the date it becomes effective, whichever is later. Regulations are unclear when to amend disclosure statements for law changes if a plan agreement amendment is not required. The safest course of action is to amend disclosure statements as soon as administratively feasible after significant changes become effective. HOW TO AMEND Most document providers, like Ascensus, offer amendments. When both the plan agreement and disclosure statement are being amended, document providers usually combine both into one amendment event. Once your organization has the amendments, it should follow these steps: 1. M ail each IRA owner a copy of the amendment to the individual’s last known address. It’s a good idea to enclose a cover letter explaining the amendment. If any are undeliverable and are returned, keep the undelivered amendment in the IRA owner’s file. 2. D ocument that the amendment was sent by placing a copy in each IRA owner’s file or creating a master file. A master file should contain a copy of each amendment, a dated cover letter, and a list of mailing recipients. Amendments for tax law changes often do not require a signature or consent from the IRA owner. But some amendments may require the IRA owner’s consent (i.e., a fully signed amendment by both parties), depending on the type of document, amendment, and state laws. For example, a change in the trustee or custodian often requires affirmative consent. If your organization is unsure whether a signature is required for an amendment, it should check with its legal counsel. TRUST THE EXPERTS A document provider, like Ascensus, can offer a plan document and disclosure statement amendment, either separately or together. Ascensus offers multiple options to help you amend your IRAs, including an amendment mailing service. With new IRS model documents on their way, and required amendments likely, trust the experts at Ascensus to help. We’d be happy to provide a complimentary document review and discuss amendment options for your organization. Schedule a call with your Ascensus sales representative today or contact us at 800-346-3860. Regulations are unclear when to amend disclosure statements for law changes if a plan agreement amendment is not required.