Can My Employer Contribute to My IRA?
Laura Adams, MBA
Ask Money Girl: Can My Employer Contribute to My IRA?
Q. I work in a small company of 6 people. My boss doesn’t want to set up a retirement plan; however, I think I could talk him into contributing to my own Roth IRA. Can he legally do that and will he still receive tax incentives to do so?
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Answer. Employers can set up a payroll IRA programopens PDF file where they deduct contributions from your paycheck and deposit them into your IRA. However, a payroll IRA doesn’t allow an employer to contribute additional matching funds to your IRA nor does it offer any tax incentives to the company.
A SEP-IRA or Simplified Employee Pension would be a great option because contributions are only made by the employer and they’re tax deductible to the company. A SEP-IRA is very easy and inexpensive to set up and maintain and allows employers to decide each year whether, and how much, to contribute to their employees’ SEP-IRA accounts.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.