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:
2. Request a refund
Here are your 2 options if you leave your
IMRF employer:
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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