Employee Salary Savings Plans
These are after-tax savings accounts that can be set up through an employer’s payroll department or service. Employees can direct funds from their paychecks to go to either a mutual fund or mutual fund money market account. They are usually done through a direct deposit method or using the “ACH” system.
Employees may also be able to direct funds from their paychecks to
- Traditional IRA’s,
- ROTH IRA’s,
- Coverdell (Education) IRA’s,
- College Savings Plans (529 plans).
The benefit of such Employee Savings Plans are that they are automatic. The employee doesn't need to remember to make contributions or put money away for a rainy day.
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