Offering a conduit individual retirement account (IRA) to your employees can help them rollover existing IRA accounts, such as 403(b) tax-sheltered annuities or other deferred compensation plans. Providing this option to employees is beneficial because it allows them to roll over the money into an account provided by your organization without tax or penalty. That is, of course, as long as it's done correctly.

Keep in mind that there aren't any certain requirements needed to establish a conduit IRA, but you need to make sure that the monies aren't mixed in with other IRA monies. Before deciding upon what type of conduit IRA to offer your employees, consider the following:

1. Locate investment companies to provide conduit IRA information and services for your employees.

2. Find financial institutions to help with conduit IRA transfers.

3. Work with a conduit IRA consultant to answer any questions.

Action Steps
The best contacts and resources to help you get it done

Find an organization to assist with setting up a conduit IRA account

Formerly called rollover IRAs, conduit IRAs are easy enough for investment companies to handle. Keeping the money in these accounts until your employees can invest them in your accounts can help the money accrue interest.

I recommend: Check out Fidelity Investments and its rollover IRA plan. The Vanguard Group also has options in dealing with IRAs from previous employers. By working with its retirement specialists, your employees can walk through all the steps needed to transfer over the money securely.

Use a financial institution to invest a conduit IRA

Don't count out banks because you think they may not know how to deal with conduit investments. You may be surprised at what they can offer. They oftentimes have employees who work solely on IRAs and other investing options, so they should be up-to-date as to what the current rules and restrictions are.

I recommend: A financial institution to consider is Bank of America and its no-fee IRA. Look into services offered by Washington Mutual to help your employees have better control over their investments. Enter a ZIP code and compare the options available.

Locate a conduit IRA consultant to answer any questions

Don't feel awkward if you, as a business manager, need help with conduit IRA questions. You can locate conduit IRA advice from consultants, and they can provide answers as well as advice on what type of investments your employees should take.

I recommend: Wolters Kluwer Financial Services offers the same type of service it provides at conduit IRA training seminars. Complete an online form to receive additional help from a representative. TD Ameritrade offers help with the use of a financial adviser to offer conduit IRA advice. Use a Chase Investment Services financial planner to walk your employees through the steps and answer any investing concerns they have.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Remember that not all retirement plans can be used for a transfer to a conduit IRA. Employees should check before they invest, and they shouldn't add funds from a source that is not tax deferred to the conduit IRA during the time the money is sitting in the account. This could make the balance subject to taxes.