Workplace Savings Payroll Deducted IRA

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.

Payroll IRA Image

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 IRA

Account 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 This means that assets in the traditional IRA are not taxed until they are withdrawn, allowing the owner to defer paying taxes until retirement, when he or she might be in a lower tax bracket.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.

Visit the IRS website for more details

Investment Options

You and your employees will have access to diverse, flexible investment choices, including a list of mutual funds and other investments selected and maintained by Morningstar, a registered advisory firm.

Learn more about Morningstar

Payroll Deducted IRA Pricing

Fees to the Employer
Set-up fee              $250

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.

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