Does Icon Support Employer Matching?
Employers who want to support their employees' retirement savings have the flexibility of offering what we call a financial wellness bonus. It’s a fast and easy way to support and reward your team.
Is this the same as a match?
Employer “matching” is a technical, regulated process designed for 401(k) plans. Because the Icon PRP is a payroll-deduct IRA, direct employer matching isn't available under IRS guidelines. This isn't a platform limitation; it applies to all payroll-deduct IRAs.
As a payroll-deduct IRA, there are specific IRS guidelines that Icon PRP administers must follow. Employer contributions must be:
1. Voluntary
2. Taxed as income to the employee
3. Recorded in payroll as additional pay
How does the financial wellness bonus work in practice?
The employer chooses the amount and timing and confirms the contribution with the employee.
The financial bonus must be treated as additional compensation and taxed as income. This means it’s paid to the employee as wages, not contributed directly to their Icon account. It should appear on their pay stub as compensation.
The employee can then elect to have that amount deducted and contributed to their Icon account. The key is that employees must always have the option to keep the bonus as pay.
You can offer employer contributions in one of two ways:
Recurring bonus
If you prefer something automatic, you can increase an enrolled employee’s paycheck each payroll by the amount you would like to contribute from the business. The employee can then elect to contribute that amount into their Icon account by adjusting their payroll contribution, or they can keep it as additional compensation.
One-time bonus
Employers can offer a discretionary bonus at their discretion. This is commonly used for year-end bonuses or performance-based rewards.
Your payroll platform
If your payroll platform is not technically integrated with Icon’s platform, you’ll need to ensure payroll reflects both the compensation and any corresponding Icon deduction. For integrated employers, recurring contribution tracking is handled through the integration, but the compensation must still exist in payroll.
Need Help?
We can help you determine the right structure for your team, review your payroll setup, and guide you through executing the bonus in your Icon dashboard.
If you’re considering offering a financial wellness bonus, contact our team and we’ll walk you through next steps!