The easiest way to help employees save
Payroll Deducted IRAs are the simplest option for your business to offer retirement savings to your employees. There are no employer contributions or plan-level reporting and compliance requirements like there are with plans such as a 401(k).
The employer’s responsibility is simply to transmit the employees’ authorized deductions to Millennium Trust. In general, if this arrangement is offered to any employee then it should be offered to all employees.
Employer Obligations
The IRS describes the Payroll Deducted IRA as “probably the simplest retirement arrangement that a business can have”, and for good reason:
- The employer has no filing requirements
- There are no employer contributions; only employees contribute
- Requires little administrative cost or requirements
The employer is responsible for facilitating the payroll deducted contributions into employee accounts. Visit the IRS website for more details.
Payroll Deducted IRAAccount Features
Employee Contributions
An employee may defer up to $6,000 in 2019. Employees age 50 or older can make a catch-up contribution of up to $1,000. In a payroll deduction IRA program, employees have the option to choose either a traditional or Roth IRA.
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Here’s the difference:
Traditional IRA
Contributions to a traditional IRA may be tax deductible, and the earnings grow on a tax-deferred basis. This means that assets in the traditional IRA are not taxed until they are withdrawn, allowing the owner to defer paying taxes until retirement, when he or she might be in a lower tax bracket.
Roth IRA
Funded with after-tax dollars; the contributions are not tax deductible – although you may be able to take a tax credit of 10 to 50% of the contribution, depending on your income and life situation. In addition, individuals with income over certain levels may not be eligible to contribute to a Roth IRA. But when you start withdrawing funds, qualified distributions are tax free.
Investment Options
You and your employees will have access to investment options selected and monitored by Morningstar Investment Management LLC* to provide sufficient choice without overburdening participants, and is designed to provide access to assets across a broad spectrum of capitalization and investment strategy.
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Morningstar Investment Management LLC is a registered investment adviser and subsidiary of Morningstar, Inc. Morningstar Investment Management uses its affiliate, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission, as a sub-adviser in providing an investment lineup to The Plan Sponsor. The investment lineup provided to The Plan Sponsor by Morningstar Investment Management is derived from the universe of investments made available by Millennium Trust Company for use in its service. The universe does not include all investments available in the marketplace. Both the universe of investments defined by Millennium Trust Company and the list of investments selected by Morningstar Investment Management LLC are subject to change without notice. Particular investments in the investment lineup may not be appropriate investments for individual employees, and there may be other investment options that are more suitable. Morningstar Investment Management may have more favorable opinions of certain investments which are not included in the universe made available by Millennium Trust Company. Morningstar Investment Management’s selections were based on qualitative factors and quantitative analysis in addition to the judgment of analysts. Morningstar Investment Management is not acting in the capacity of adviser to investors. The Morningstar name and logo are registered marks of Morningstar, Inc.
Payroll Deducted IRA Pricing
Fees to the Employer
Set-up fee $250
Contribution Reversal Fee $15
Fees to the Employees
Annual Account Fee $40
Annual Servicing Fee 50 basis points*
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*Financial comparisons use basis points to track very small percentages. One basis point is simply 1/100 of one percent.