IRA Adoption Agreement and Plan Document

What Is an IRA Adoption Agreement and Plan Document?

An IRA Adoption Agreement and Plan Document is a contract between the owner of an IRA and the financial institution where the account is held. The IRA adoption agreement and plan document must be signed by the account owner before the individual retirement account (IRA) can be valid. It contains basic personal information about the account holder, such as their address, date of birth, and Social Security number (SSN), and lays out the detailed rules regarding the retirement account. This article highlights the details about this contract and the associated forms.

IRA Adoption Agreement and Plan Document Explained

The IRA adoption agreement and plan document provides investors with some very important information about the plan. This includes:

The contract further outlines how and when account funds may be withdrawn, provisions regarding required distributions, how employer contributions are allocated, under what conditions the account may be transferred, what will happen to the account if the owner (depositor) dies, and what fees and expenses are associated with the plan.

An IRA adoption agreement must be accompanied by a basic plan document that explains how the plan will operate.

The IRA adoption agreement provided by your financial institution must be accompanied by a plan document that outlines the plan details.

IRS Forms

An account owner should complete an IRA adoption agreement for traditional and Roth IRAs, 529 and other education plans, and Health Savings Accounts (HSA). This agreement is also completed for qualified plans, SIMPLE IRAs, SEP IRAs, and a variety of employer-sponsored retirement plans.

The Internal Revenue Service (IRS) provides informational guides and forms covering IRA adoption and plan documentation in the Form 5305 series.