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 address, date of birth and Social Security number) and lays out the detailed rules regarding the retirement account.
The IRA adoption agreement and plan document explains the plan's annual contribution limits, eligibility requirements, how contributions may be invested, the types of investments that are prohibited (e.g., collectibles) and the amounts that may be invested, how and when the account funds may be withdrawn, provisions regarding required distributions, how employer contributions are allocated, under what conditions the account may be transferred, what will happen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 a plan will operate.
Account owners should complete an IRA adoption agreement for their traditional and Roth IRAs, and for Education and Savings Accounts and Health Savings Accounts (HSA). Such an 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.
Examples of an IRA adoption agreement from Putnam Investments may be found here. Another example can be found here. Examples for a SIMPLE IRA adoption agreements from TIAA-CREF and American Funds can be found here and here.