Pub. 2 2021 Issue 5

cbak.com 14 In Touch T he IRS is expected to release new IRA model documents soon. When that happens, all IRA trustees, custodians, and issuers will most likely be required to amend the new IRS model document or use the new IRS language in their prototype documents. And going forward, all newly established IRAs will need to use the new document or language. Review Your Current Agreement Before that happens, consider reviewing your existing IRA plan agreement – whether it’s a model document or a prototype – to ensure it still makes sense for your organization. Is it still in line with your procedures? Should it be modified to better fit your business? If you’ve been contemplating making any IRA document changes, now may be the ideal time to do so. Pay Close Attention to the Language IRS model forms satisfy the basic statutory requirements for IRAs and contain specific language based on the requirements for each type of IRA. If your organization uses the model form or a document based on the model form, such as the Ascensus Simplifier®, pay close attention to the language in the last article of the form (Article VIII or Article IX), which can be customized without conflicting with Internal Revenue Code requirements. It’s in this last article that your organization or document provider can make changes and address items not covered in the other articles of the form: Articles I-VII for a Traditional IRA and Articles I-VIII for a Roth IRA. These articles generally cannot be changed. Don’t Forget About Your Disclosure Statement When reviewing your plan agreement, include a review of your disclosure statement, which must be given to IRA owners along with a plan agreement when they open an IRA. It’s the non-technical counterpart to the IRA plan agreement; it should explain the IRA rules in plain language and must include a financial disclosure. Your disclosure statement will likely need to be amended when the new model document is released. While the IRS does not provide a model disclosure statement or disclosure statement language, it does allow you to use IRS Publications 590-A and 590-B to satisfy the disclosure statement requirement. Otherwise, your organization must write its own disclosure statement or obtain one from a forms vendor. Get Ready: BY LISA WALKER, CISP, CHSP, ASCENSUS, LLC New IRA Model Documents Are Coming