Looking at the simplest way to create retirement accounts for employees in a small business, setting up payroll deduction IRAs seems the easiest. But if an employer wants to contribute to an employee's IRA, for example as a form of bonus, are they allowed to do that?

Several publications on the Dept. of Labor website say that the contributions are by the employee, but they don't specifically rule out an employer putting some amount in the account as well.

1. This is in regards to a small business with less than 10 employees.
2. I'm would to assume that wherever the money comes from, the total going into the account would have to meet the $5000 ($6000 if over 50) restriction.

Thanks in advance.

Looking at the simplest way to create retirement accounts for employees in a small business, setting up payroll deduction IRAs seems the easiest. But if an employer wants to contribute to an employee's IRA, for example as a form of bonus, are they allowed to do that?

Several publications on the Dept. of Labor website say that the contributions are by the employee, but they don't specifically rule out an employer putting some amount in the account as well.

1. This is in regards to a small business with less than 10 employees.
2. I'm would to assume that wherever the money comes from, the total going into the account would have to meet the $5000 ($6000 if over 50) restriction.

Thanks in advance.

Have you looked into Keogh plans?
Keogh Plan Definition | Investopedia (http://www.investopedia.com/terms/k/keoghplan.asp#axzz1rapfZfIS)

Or SEPs?
SEP Retirement Plans For Small Businesses (http://www.dol.gov/ebsa/publications/SEPPlans.html)

I had forgotten about Keogh Plans. BTW, as near as I can tell, of the 2000+ publications available on the IRS site, not one has "Keogh" as part of its title.

I have to do more reading to see if you have pointed me to my answer or not. But thank you for the suggestions.

BTW, as near as I can tell, of the 2000+ publications available on the IRS site, not one has "Keogh" as part of its title.


I'm not surprised, Keogh is the popular name they are also known as an HR(10) plans. Try looking for that.