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February 23, 2009

Employer Sponsored IRA



Amounts contributed to an employee’s Traditional IRA or Roth IRA by an employer or; by an association of employees to the IRA of its members.

  • Amounts contributed to employer-sponsored IRAs are subject to the same contribution limits and eligibly requirements of  Traditional IRAs and  Roth IRAs.
  • Amounts contributed by the employer IRAs are treated as taxable compensation to the employee and reported on the employee’s W-2
  • Contributions to employer-sponsored IRAs are deductible on the employer’s business tax return
  • Contributions to employer-sponsored IRAs are subject to FICA and FUTA taxes
  • Employer-sponsored IRAs are subject to, 1099-R , 5498 and 5500 reporting

Referring Cite

IRC  §219(f)(5), IRC §408(c)

Additional Helpful Information

The governing instrument creating the trust is an employer-sponsored IRA  if it meets the following requirements:

  • Satisfies the requirements of an IRA, including
    • Contributions must be made in cash
    • The custodian/trustee must be a financial institution  approved by the IRS to hold IRAs
    • The balance must be nonforfeitable
    • The RMD rules must apply

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