Payroll Deduction IRAs
Any employer or sole proprietor can set up a payroll deduction IRA program. Here are the basics:
Employers who set up payroll deduction IRAs must allow all employees to participate. There are no service-length requirements. Employees are responsible for setting up a traditional or Roth IRA and must meet IRA eligibility requirements.
Employees determine how much of their paychecks they want to contribute to their IRAs. The 2020 contribution limit for IRAs is $6,000, or $7,000 for investors age 50 or older. Employer contributions are not allowed.
Employees who set up a payroll deduction IRA benefit from all the tax advantages offered by IRAs.
Payroll deduction IRA distributions follow traditional and Roth IRA distribution rules.
Employees can establish an IRA with American Funds or another financial institution, and choose any of the investments offered.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.