Voluntary Additional Contribution Rules Changes

 

Read more about IMRF’s Voluntary Additional Contribution Program.

IMRF members can contribute an additional 10% of their earnings (Tier 2 members can contribute 10% of their earnings up to the wage cap) to the Voluntary Additional Contribution program. At retirement, the member can take his or her Voluntary Additional Contributions as a lump sum or as an additional monthly pension.

Voluntary Additional Contributions are after tax—they are not tax-deferred like usual IMRF member contributions. However, the interest a member earns on his or her Voluntary Additional Contributions is tax-deferred.

Although the Voluntary Additional Contribution program is designed to provide members with an additional monthly pension, members are eligible to take a refund of their Voluntary Additional Contributions before they retire.

Recent legislation, P.A. 98-0218, requires IMRF to meet Internal Revenue Code requirements regarding Voluntary Additional Contribution refunds. The Internal Revenue Code does not allow refunds of the interestearned on Voluntary Additional Contributions while the member is still employed by his or her IMRF employer.

As a result, the rules regarding Voluntary Additional Contribution refunds will change effective February 1, 2014:

Currently, members can apply for a refund of their Voluntary Additional Contributions and interest at any time.

As of February 1, 2014:  

Refunds:

  • A member cannot take a refund of his or her Voluntary Additional Contributions plus interest while the member is working for the same IMRF employer where he or she made the Voluntary Additional Contributions.
  • A member may take a refund of Voluntary Additional Contributions without interest while he or she is still working for an IMRF employer. The member’s Voluntary Additional Contribution interest must stay on deposit until the member stops working for his or her IMRF employer.

    The member’s Voluntary Additional Contributions interest will continue to earn interest until the member stops working for his or her IMRF employer and applies for a refund of the interest.

Additional monthly pension:
When a member retires with Voluntary Additional Contributions on deposit, he or she can receive those Voluntary Additional Contributions as an additional monthly pension only if the member’s account balance is $4,500 or more.

These new rules are effective February 1, 2014.

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