A retirement plan for self-employed individuals or small business owners under which employees establish a traditional, Roth, or nondeductible individual retirement account (IRA) and authorize an amount of money to be withheld from their earned wages to be deposited into it. Payroll deduction IRAs are funded by employee contributions only. Any employer with one or more employees, including self-employed individuals, can establish a payroll deduction IRA program.

For more information, see Practice Note, Payroll Deduction Individual Retirement Accounts (Payroll Deduction IRAs).