Pub. 5 2015-2016 Issue 2

12 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 Even if a financial organization contracts with a data processing firm, the financial organization ultimately is responsible for any incorrect reporting penalties. TRISH REILLEY COPY WRITER ASCENSUS IRA Compliance Mistakes Financial Organizations Are Making I RAcompliance is abig responsibility—evena li- ability—for financial organizations that admin- ister IRAs. And when financial organizations make compliance mistakes while operating their IRA programs, it can be costly. As financial or- ganizations face staffing changes with Baby Boomers retiring, the risk for compliance mistakes is greater. Gone are the days of a dedicated IRA specialist run- ning the IRA programat each organization. Instead, staff new to IRAs must learn not only the day-to-day IRA operations, but the IRA rules. This transition opens the door to unintentional compliance errors. Add to that constantly changing IRA rules and additional IRS field agents conducting audits, and it’s no wonder IRA compliance mistakes happen. Common Errors So what types of compliance mistakes are beingmade? In conducting compliance reviews of IRA programs across the country, Ascensus consultants have documented the following common errors. Plan Documents Compliance begins the moment an IRA is established. The IRS requires that financial organizations provide a plan agreement, dis- closure statement, and financial disclosure to IRA owners when they open an IRA. Many financial organizations do not have proof that they provided these opening documents to their IRA clients. Without copies of the signed doc- uments or signed acknowledgements, financial organizations could face a penalty of $50 for each failure, per document.