Pub. 5 2015-2016 Issue 1

10 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE The IRS periodically updates the LRMs, often accompanied with amendment guidance, for major law changes or after a series of changes affecting IRAs has occurred. LISA WALKER COPY WRITER ASCENSUS When and How to Amend IRA Documents I t’s become rare that a year goes by without new laws or other IRS guidance that in some way, directly or indirectly, affects IRAs. Late- ly, IRAs and retirement savings in general have been a target for change in legislative bills and government initiatives. Some recent proposals give taxpayersmore opportunity and incentive to save for retirement, while others remove some of the benefits associated with retirement saving arrangements. Keeping up with these changes and under- standing when IRA document amendments are needed is not always easy. Nevertheless, financial organizations are responsible for amending IRA documents when needed. They must decide which documents to amend, when to amend, and how to communicate these amendments to their clients. When to Amend Of the three documents required for IRAs, only two are subject to amendments: the plan agreement and the disclosure statement. A financial disclosure must be provided when an IRA is first established, but it is not required to ever be amended. An amendment often is necessary when a major tax law affecting IRAs is enacted. This can affect both plan agreements and disclosure statements or only may affect the language in the disclosure statement. For major tax laws, the IRS often releases guidance, usually in the form of a revenue procedure, specifying that the amendment is required and when the amendment must be completed. If the IRS does not release guidance but changes to the IRA rules affect a financial organization’s documents, an amendment to the disclosure statement often is required. New legislation and rule changes are not the only reasons for amending IRAs. Many finan- cial organization acquisitions and mergers re- quire some formof plan document amendment. Or if a financial organization simply decides to change to a different IRA document, it should review both the IRA documents it currently uses and the new documents. In some cases, the financial organization may simply start using the new forms. In others, the financial organizationmay need to notify IRA owners of specific changes in the IRA documents.