Definition
Amounts contributed to an employee’s Traditional IRA or Roth IRA by an employer or; by an association of employees to the IRA of its members.
- Amounts contributed to employer-sponsored IRAs are subject to the same contribution limits and eligibly requirements of Traditional IRAs and Roth IRAs.
- Amounts contributed by the employer IRAs are treated as taxable compensation to the employee and reported on the employee’s W-2
- Contributions to employer-sponsored IRAs are deductible on the employer’s business tax return
- Contributions to employer-sponsored IRAs are subject to FICA and FUTA taxes
- Employer-sponsored IRAs are subject to, 1099-R , 5498 and 5500 reporting
Referring Cite
IRC §219(f)(5), IRC §408(c)
Additional Helpful Information
The governing instrument creating the trust is an employer-sponsored IRA if it meets the following requirements:
- Satisfies the requirements of an IRA, including
- Contributions must be made in cash
- The custodian/trustee must be a financial institution approved by the IRS to hold IRAs
- The balance must be nonforfeitable
- The RMD rules must apply
