What Is a Disclosure Statement?

In general, a disclosure💧 statement is a financial document given to a participant in a transaction that spells out key information in plain language.

For retirement accounts, a disclosure statement is a document explaining the rules of financial transactions for the account in plain, nontechnical language. An individual retirement account (IRA) plan administrator must provide a 澳洲幸运5官方开奖结果体彩网:disclosure statement to the IRA owner at least seven days before the IRA is established or at the time the IRA is established, if the IRA owner is given seven days in which to revoke the IRA, if they wish.

A disclosure statement also may refer to a document outlining the specific terms and conditions of a loan, including its 澳洲幸运5官方开奖结果体彩网:interest rate, any fee🌜s, the amount borrowed, insurance, and any prep🐎ayment rights and the responsibilities of the borrower.

Understanding Disclosure Statements

In terms of an IRA disclosure statement, it must include information related to IRA fees, 澳洲幸运5官方开奖结果体彩网:distribution rules and penalties, eligibility requirements for establishing an IRA, and its general rules. By contrast, when granting a loan, the lender must send tꦰhis document to the borrower before the loan proceeds are ꦚdisbursed.

Retirement Account Disclosure Statements

There are several types of disclosure statements for different forms of retirement accounts. 澳洲幸运5官方开奖结果体彩网:Traditional IRAs allow individuals to direct pretax income toward investments that can grow tax-deferred.

Another alternative, the Roth IRA, accepts after-tax contributions. Investments that grow within Roth IRAs aren't taxed upon withdrawal.

The 401(k) plan is a defined contribution (DC) plan in which an employer helps by contributing toward employees’ retirement savings (often after a set period of vesting). Other types of employer-sponsored plans include the SIMPLE IRA and SEP IRA.

Disclosure statements for all of these plans must clearly spell out who contributes to the plan, contribution limits, if contributions are pre- or after-tax, if investments grow 澳洲幸运5官方开奖结果体彩网:tax-deferred, and when it is approღpriate to begin withdrawals withou𝕴t penalty.

If an individual🗹 does withdraw funds prematurely, disclosure statements should detail additiona🐠l penalties.

Loan Disclosure Statements

With mortgages, student loans, small business loans, auto loans, and personal loans, disclosure statements must accompany the contract. These spell out the loan terms, including the annual percentage rate (APR), finance charges, the full amount of the financing, any up-front payments, penalties for late charges, 澳洲幸运5官方开奖结果体彩网:collateral, options for a grace period(s) or loan defer✃ment, and what hap💃pens in the case of loan default.

The Bottom Line

A disclosure statement is a financial document provided to participants in a transaction that spells out key information in simple, non-technical language. These may be presented for retirement accounts to explain the rules of contributions and withdrawals from the account, among other transactions, often when a new account is established or on a periodic basis once it's established.

A disclosure statement is usually also part of a loan, stating details of the transaction such as the interest rate, fees, the amount borrowed, loan insurance, any prepayment rights, and the borrower's responsibilities.