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February 23, 2009

Employer Sponsored IRA

Your Guide



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

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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