Expert: Ed McFarland - 2/9/2006

Question
I have an employee that has elected to contribute to an IRA rather than participate in the company SIMPLE.  How do I set up this item for payroll?  Do I deduct his contribution from his W-2 like the simple plan or do I let him do that on his taxes and leave his wages at full amount?

Answer
Yes, check with your payrol provider and do the wage reduction and your contribution.

Your payroll service provider or plan provider should be able to help you with this.

If you are not using a payroll company, now would be a good time to start. Penalties for non compliance are sever and a mistake here will create more problems than you need.

Good luck.