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Can My Employer Contribute to My IRA?

By
Laura Adams, MBA,
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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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A. Employers can set up a payroll IRA program 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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