The Internal Revenue Service has released a final version of regulations that could help employers encourage workers to save more for retirement.[@@]
The regulations, revisions to Section 408(q) of the Internal Revenue Code, set rules for employers that offer individual retirement account options within 401(k) plans and other retirement plans that qualify for special tax breaks.
The Bush administration has promoted worksite IRA programs, or “deemed IRAs,” as vehicles for increasing workers’ low retirement savings rate. The IRS first proposed regulations that would implement deemed IRA provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 in May 2003.
Originally, the IRS was going to require employers to put the deemed IRA assets and their own retirement plan assets in separate trusts. But parties that commented on the proposed version of the regulations “argued the requirement of a separate trust would unduly complicate the administration of the plan and lead to potentially higher costs for the plan sponsor,” Robert Walsh and Linda Conway, IRS officials, note in a discussion of the regulations published Thursday in the Federal Register.