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Payroll Deduction IRAs

A Payroll Deduction IRA is probably the simplest retirement arrangement that a business can establish. Under a Payroll Deduction IRA, an employee establishes an IRA (either a traditional IRA or a Roth IRA) with a financial institution. The employee then authorizes a payroll deduction for the IRA, up to certain contribution limits.

Contribution Rules

The maximum amount an employee can contribute to a Payroll Deduction IRA in 2018 is $5,500. However, employees age 50 or older are generally permitted to make additional “catch-up” contributions of $6,000.

Employers cannot contribute to an employee’s Payroll Deduction IRA.

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