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IRA contributions will be reported on Form 5498: IRA contribution information is reported for each person for whom any IRA was maintained, including SEP or SIMPLE IRAs. An IRA includes all investments under one IRA plan.
On Form W-2 for employee compensation, SIMPLE IRA contributions made by the employee are deducted from the wages, tips, and other compensation box, and box 13 retirement plan is selected.
A Traditional IRA provides tax savings in the form of pre-tax contributions. Money you contribute can be taken as a deduction, which lowers your Adjusted Gross Income and reduces your taxes for that year.
Under a Payroll Deduction IRA, an employee establishes an IRA (either a Traditional IRA or a Roth IRA) with a financial institution. The employee then authorizes a payroll deduction for the IRA. Your responsibility as an employer is simply to transmit the employees authorized deduction to the financial institution.
Deducting your IRA contribution Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.
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Refer to your IRA statements to determine the amount you have contributed for the specified tax year. Annual contribution limits are aggregated across all IRAs held at Fidelity and other institutions. It is your responsibility to ensure that you are not exceeding the contribution limits.
Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions. All contributions are made directly to an IRA set up for each employee (a SIMPLE-IRA).
People tend to think of an IRA as something just for individuals (hence the I in IRA). But an employer can help its employees to set up and fund their IRAs.