Treasury and the IRS Finalize 'Deemed IRA' Rules

On Wednesday, the Treasury and the IRS finalized regulations regarding "deemed IRAs" in employer-provided retirement plans.

A deemed IRA is an important retirement savings tool that was added to the tax code by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Deemed IRAs have been effective since January 1, 2003. A deemed IRA allows an employer to offer to employees the ability to keep their IRA assets in the employer's tax-qualified retirement plan as a separate IRA account within the plan. Proposed regulations under section 408(q) were published on May 20, 2003. Today's final regulations address the issues raised by the comments submitted by various plan sponsors that are interested in providing deemed IRAs to their employees.

"These regulations will enhance the willingness of employers to offer deemed IRAs to employees as well as the interest of service providers in offering these products to employers," said Greg Jenner, Acting Assistant Treasury Secretary for Tax Policy. "These rules remove many of the barriers that previously kept many employers and service providers from using this worthwhile benefit," he added.

The regulations issued today facilitate deemed IRA establishment by state and local governmental employers by making it possible for governmental employees to serve as trustees of deemed IRAs. Because allowing governmental entities to serve as deemed IRA trustees requires a change to the IRA nonbank trustee regulations, temporary and proposed changes to those regulations were also issued today in conjunction with the final deemed IRA rules.

The final regulations also remove some of the administrative burdens associated with establishing deemed IRAs for all employers, such as the requirement that deemed IRAs must be maintained in a separate trust from the other retirement plan assets.

You may like these other stories...

Hertz and Icahn make peaceThere won’t be any nasty, protracted proxy battle between Hertz Global Holdings and activist investor Carl Icahn. The rental car chain agreed last Thursday to give Icahn – who has...
For bitcoin users, the taxman cometh. And you best know how to calculate taxes owed on what the IRS calls convertible virtual currency.In March 2014, the IRS issued Notice 2014-21, which declares virtual currency will be...
Majority of House of Representatives urges leadership to preserve cash method of accounting for tax purposesA bipartisan majority of the House of Representatives – 233 members – has signed a letter urging House...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.