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IRS says revised IRA documents coming soon
WASHINGTON (12/2/10)—The Internal Revenue Service (IRS) has now officially indicated that it will be releasing revised model Individual Retirement Account (IRA) documents soon. The IRS last week released Revenue Procedure 2010-48, providing amendment guidance on model and prototype IRA documents and information on submitting prototype documents to the IRS for approval. Most credit unions use versions of the model IRA documents to establish IRAs for their members. In this guidance, the IRS states that although it will not require model document IRAs to be amended for the law changes listed in Rev. Proc. 2010-48, it “recommends adoption of the latest model IRAs.” The IRS expects to issue revised model documents shortly, but credit unions can continue to use the current versions of the model agreements until the revised versions are issued. Seventeen IRA-related law changes have occurred since the IRS last amended its model IRA documents. Many of these law changes are significant, including eliminating the Roth IRA conversion eligibility requirements, allowing Roth IRAs to accept rollovers from employer-sponsored plans, and allowing nonspouse beneficiaries to roll over employer-sponsored plan assets to IRAs. “We anticipate that credit unions will follow the IRS recommendation to adopt the latest model IRAs, as the current model IRA agreements are outdated due to the large number of law changes,” said Dennis Zuehlke, compliance manager for the Ascensus Middleton, Wisconsin-based IRA programs, which serve 80% of credit unions offering IRA programs. Providing up-to-date IRA documents is critical to IRA program compliance, and by adopting the latest model IRAs and amending existing IRA agreements, credit unions can provide their members with accurate IRA documents that reflect the current state of the law, Zuehlke said. The IRS is not requiring amendments to prototype IRA documents either, but does provide amendment guidance in Rev. Proc. 2010-48 and sample language (List of Required Modifications) on its website.
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