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February 23, 2009

Financial disclosure

Your Guide



Explanation that must be provided to IRA owners when the IRA is established, regarding the performance of the investments in their IRAs. Under these requirements, where an amount is guaranteed over a period of time, or a projection of growth in value of the IRA can reasonably be made, the disclosure statement must show the amount guaranteed or projected to be made available to the benefited individual if:

(1) level annual contributions in the amount of $1,000 were made on the first day of each year, and

(2) the benefited individual were to withdraw, in a single sum, the entire amount of the IRA at the end of each of the first five years during which contributions are to be made, at the end of the year in which the benefited individual attains the ages of 60, 65, and 70, and at the end of each year during which the increase in the guaranteed available amount is less than the increase in the guaranteed amount available during any preceding year.

Similar information must be provided with respect to amounts guaranteed or projected to be made available under an IRA which is to receive only a rollover contribution except the amounts guaranteed or projected to be made available are based on only one $1,000 contribution made in the beginning of the year the rollover contribution occurred. Revenue Ruling 86-78.

The actual language to be included in the disclosure depends on the type of investment, where guaranteed, can be reasonably projected, or cannot be either of the foregoing.

Referring Cite

IRC § 6693(a), Treas. Reg. §1.408-6(d)(4)(ix), Revenue Ruling 86-78,

Additional Helpful Information

A $50 penalty will apply for each failure to timely provide the financial disclosure, unless it is shown that such failure was due to reasonable cause.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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