A government news release said the deemed IRAs, which give employees a chance to keep their IRA assets in the company’s qualified plan segregated in a separate account, have been available since January 2003. They were the subject of proposed rules issued in May 2003, as well as Tuesday’s final version that covered concerns raised during the rulemaking comment period, officials said.
The final regulations 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, according to the news release.
Finally, the regulations 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 government agencies 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 Tuesday with the final deemed IRA rules
“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.”
The regulations are effective July 22, 2004.