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...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
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.