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Establishing a non-payroll, employee choice benefit program


Guest Tom Byrne
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Guest Tom Byrne

We are a small Non-Profit Organization (Literacy Volunteers of America, DuPage, Inc). We have two full-time salaried employees. Our Board would like to offer each employee $100 per month to cover a benefit of their choice. One employee has her health insurance and would like the $100 applied to this. The other is covered by her spouses insurance and would like the $100 applied to a pension type benefit. We would like the organization to pay this benefit directly to the provider without adding the $100 to the payroll. Can we pay the Health Insurance Company $100 directly? Can we pay $100 directly to an existing IRA account (does it matter if it is Roth or regular IRA?)? Any suggestions would be greatly appreciated.

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  • 2 weeks later...

The employer can act as an agent of the employee and make contributions to a Roth or Traditional IRA establisherd by the employee. The amount (contribution) is treated as "wages" for all purposes. It is not an employer pension expense and is deducted by the employer as "wages."

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