Disclosure Statement

A disclosure statement is meant to inform someone who’s getting their own IRA as to what exactly they’re getting into...in plain English. Well, they try.

The plan administrator of your IRA is legally required to give you a disclosure statement at least a week before the IRA is created (or the IRA owner must be given a week to revoke their IRA, either way). This is going to include things like IRA fees, withdrawal and deposit limit rules, penalties for early withdrawal, and special exceptions for early withdrawal.

More generally, a disclosure statement can also refer to a to-the-point document that tells someone all about the loan they just signed up for: the terms and conditions, the amount borrowed, the interest rate, fees, prepayment details, and all responsibilities as a borrower. Legally, lenders must provide disclosure statements to loan borrowers before the loan is given to them.

When you hear “disclosure statement,” your ears should perk up. This is the best they can do sans technical and legal jargon.