Tuesday, June 17, 2014

IMRF will pay you 7.5% (rate can change) on voluntary contributions

The Illinois Municipal Retirement Fund (IMRF) Voluntary Additional Contribution program gives you the opportunity to earn 7.5% (subject to change) on after-tax contributions.  Surprisingly, only a handful of people are aware of this program and even less are taking advantage of it!  How does the program work?  IMRF allows you to make after-tax contributions up to 10% of your earnings.  Then, at the end of the year, whatever your January 1st balance was, IMRF applies a credit to your account equal to 7.5% of that amount.

Here’s an example of how the interest crediting works:

January 1, 2014 balance: $0
2014 contributions: $1,000
Credit applied on December 31: $0

January 1, 2015 balance: $1,000
2015 contributions: $500
Credit applied on December 31: $75

Here are your 2 options if you stop making contributions:
     1. Leave your VAC on deposit with IMRF, or
     2. Request a refund

Here are your 2 options if you leave your IMRF employer:
     1. Leave your VAC on deposit with IMRF (only if you leave 
your regular 
         IMRF contributions on deposit), or                                                                                                           
     2. Withdraw your VAC (your regular 
contributions can stay)

Here are your 2 options for withdrawals:
     1. Take a lump sum, or
    2. Get a monthly annuity (if your VAC balance is $4,500
 or more)

Important things to consider:

-       You can download IMRF’s VAC enrollment form here
-    The information provided is a condensed version of the VAC program.  Please be complete 
      in your research and review all of the VAC program rules, which can be found here
-        If you withdraw your VAC before 59 ½ (or 55 if leaving an IMRF employer) you may have income tax penalties on earnings unless you rollover the taxable amount to an IRA or similar plan
-       You can get a refund of your VAC at any time, but you have to withdraw all of your VAC—you cannot take a partial refund
-       You have to consider your tax status and determine if making pre-tax or post-tax contributions to a retirement plan is right for you (my post titled “Attack of the Tax Zombies” addresses this)

Securities and advisory services offered through Ausdal Financial Partners, Inc.  Member FINRA/SIPC 5187 Utica Ridge Road Davenport, IA 52807    563-326-2064  www.ausdal.com.  Public Retirement Planners, LLC and Ausdal Financial Partners, Inc. are separately owned and operated.

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