Want to help your employees save for retirement but don’t want the responsibility of an employee benefit plan?

Think about a payroll deduction IRA program. A payroll deduction individual retirement account (IRA) is an easy way for businesses to give employees an opportunity to save for retirement. The employer sets up the payroll deduction IRA program with a bank, insurance company or other financial institution, and then the employees choose whether to participate and if so, how much they want deducted from their paychecks and deposited into the IRA. Employees may also have a choice of investments depending on the IRA provider.

Many people not covered by an employer retirement plan could save through an IRA, but do not do so on their own. A payroll deduction IRA at work can simplify the process and encourage employees to get started.

Under Federal law, individuals saving in a traditional IRA may be able to receive some tax advantages on the money they contribute, and the investments can grow tax-deferred. If the individual selects a Roth IRA, the contributions are after-tax and the investments grow tax-free.

Advantages of a payroll deduction IRA:

• The payroll deduction IRA is a simple way for employees to set up an IRA and save for their retirement.
• The employee makes all of the contributions. There are no employer contributions. By making regular payroll deductions, employees are able to contribute smaller amounts to their IRAs each pay period, rather than having to come up with a larger amount all at once.
• Administrative costs are low and there are no annual filings with the government.
• There is no requirement that an employer have a certain number of employees to set up a payroll deduction IRA.
• The program will not be considered an employer retirement plan subject to Federal requirements for reporting and fiduciary responsibilities as long as the employer keeps its involvement to a minimum.
• Providing a payroll deduction IRA for employees may assist an employer in attracting and retaining quality employees.