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Employer sending money to IRA
Last Updated April 12, 2013
Can my employer withhold money from my paycheck and send it to my IRA?
Yes, they can. This amount would be deducted from your net pay/salary (the amount that you would receive on your paycheck).Find out if they will split your paycheck between more than one account for direct deposit. If they will, you can have a portion sent directly to your IRA (via direct deposit). If not, they may prefer to send a check to your IRA custodian/trustee with instructions to deposit the amount to your IRA. Not all employers want to accommodate such requests, as it is more ‘work’ for them. So while they can, they may choose not to accommodate such requests.
Another option you can consider is to set up an automatic withdrawal from the account to which your paycheck is deposited and have the amount automatically deposited to your IRA. You would set this up so that the withdrawal is done after your paycheck is deposited. For example, assume that your paycheck is deposited to your checking account on the 15th and 30th of each month, you could schedule automatic withdrawals from your checking account a few days after your paycheck deposit dates, and have the bank deposit the amount to your IRA.
Whichever method you choose, follow-up with your bank to make sure the amount is deposited to your IRA as ‘IRA Contributions’. For amounts deposited during January 1 and April 15, notify the bank if you want those amounts to be treated as IRA contributions for the previous year.
You also want to make sure that your total contributions do not exceed the limit in effect for the year. Please click here to see limit http://www.retirementdictionary.com/definitions/ira