Payroll deduction IRAs

• No cost to employers.
• Employees pay $10 setup fee and $10 annual maintenance fee.

Employees who set up a payroll deduction IRA benefit from all the tax advantages offered by IRAs.

• Traditional IRA contributions are made before taxes are deducted, which means that income taxes are not paid at the time of investment. Instead, taxes are paid when the money is withdrawn, including on any earnings. 
• Roth IRA contributions are made with money that has been taxed. Money that’s been taxed won’t be taxed when employees withdraw it. Additionally, earnings are tax- and penalty-free for qualified distributions.*

Payroll deduction IRA distributions follow traditional and Roth IRA distribution rules.

• Traditional IRA — Distributions are taxable, but can be taken without penalty after age 59½. Distributions before age 59½ are subject to a 10% early withdrawal penalty, although exceptions may apply, such as for periodic payments, withdrawals for disability, medical bills or a first-home purchase.
• Roth IRA — Distributions up to the amount contributed can be made at any time without taxes and penalty. Distributions from earnings are tax- and penalty-free if the first Roth contribution was made at least 5 years before and the investor is at least 59½, is purchasing a first home, or is disabled or deceased. Otherwise, taxes and penalties may apply.

• Contributions are automatically deducted from employee paychecks.
• There are no IRS forms to complete.
• The program can be discontinued at any time without penalty.
• Employers don’t have any fiduciary liability because it’s not an employer-sponsored retirement plan.