Press Room
 

FROM THE OFFICE OF PUBLIC AFFAIRS

To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.

July 20, 2004
JS-1799

Treasury and the IRS Finalize “Deemed IRA” Rules

Today, 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.

 

 

 

 

REPORTS