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February 19, 2009

Disclosure statement

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Definition

A document provided to participants, explaining certain provisions in non-technical terms.
For IRAs, each participant must be provided with a disclosure statement , which provides explanations on topics including the following:

  • The statutory requirements for establishing the IRA
  • The limitations and restrictions on the deductions for contributions made to the IRA
  • The circumstances under which the IRA may be revoked
  • The effect of engaging the IRA in a prohibited transaction
  • The tax treatment of distributions
  • An explanation of penalties that may apply
  • Required minimum distribution  requirements

Referring Cite

Treas. Reg. §1.408-6(d)(4)

Additional Helpful Information

  • Providing the IRA owner with a copy of IRS Publication 590 may fulfill  the disclosure requirement
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