IMRF’s Voluntary Additional Contribution (VAC) program is an easy way to help you save additional retirement income. Voluntary Additional Contributions:
- Are limited to a maximum of 10% of your IMRF reportable earnings.
- Are after tax, not tax-deferred.
- Are a separate individual account consisting only of your contributions and any interest you earn on them. Employers do not make any contributions to your VA account.
- Accrue interest differently than traditional saving accounts.
- Continue to earn interest for as long as they are left on deposit with IMRF
If you reach 40 years of service and choose to stop making IMRF contributions, you must also stop making Voluntary Additional Contributions.
How to Start Making Voluntary Additional Contributions
To start making VAC contributions:
- Complete an "Election to Make/Change Voluntary Additional Contributions" form. You will enter the amount you want to contribute on this form.
- Your Authorized Agent must also sign this form.
- Your employer will report your VAC to IMRF.
The VAC program is available to all IMRF members -- your employer must allow you to participate in this program.
Your VA contributions:
|Can be left on deposit if:||Can be withdrawn if:||MUST be withdrawn if:|
Requesting Voluntary Additional Contribution Refunds
You can take a refund of your VAC at any time. You must withdraw all of the contributions you made—you cannot take a partial refund. Your employment status determines when you receive your interest.
If you are still working for an IMRF employer:
- You will receive a refund of your VA contributions only. Your interest must remain on deposit with IMRF until you either retire from IMRF or stop working for your IMRF employer. Interest on deposit will continue to earn additional interest.
- You may choose to continue making future VAC contributions or stop making contributions.
If you no longer work for an IMRF employer:
- You will receive a refund of your VA contributions and all interest earned.
- The interest earned on your VAC is tax-deferred. If you do not roll over your interest directly into an IRA or other qualified retirement plan, IMRF is required by federal law to make a tax withholding of 20% of the interest. If you are under age 59-1/2, you may have an additional early withdrawal tax.
To request a refund of your VAC, return a completed "Request For Refund of Voluntary Additional Contributions" form to IMRF.
How IMRF Credits VAC Interest
VAC interest is credited differently from a traditional savings account:
- A traditional savings account credits interest on the current amount in the account.
- IMRF credits interest at the end of the year based on the opening balance amount at the beginning of the year. Therefore, you will not earn any interest the first year you begin making VAC.
- The rate of interest paid is currently 7-1/2%. This rate may change in the future. If it does, IMRF will not directly notify you; however, the current interest rate will always be on our website.
|Voluntary Additional Contribution Interest Example|
|Year 1 January 1 Opening Balance||
|VA Contributions made during Year 1||
|Interest credited on Year 1 December 31 based upon
January 1 opening balance of $0 x 7.50%
|Year 2 January 1 Opening Balance||
|VA Contributions made during Year 2||
|Interest credited on Year 2 December 31, based upon
January 1 opening balance of $400 x 7.50%
|Year 3 January 1 Opening Balance||
|VA contributions made during Year 3||
|Interest credited on Year 3 December 31, based upon
January 1 opening balance of $930 x 7.50%
|Year 4 January 1 Opening Balance||
Retiring with Voluntary Additional Contributions
If you leave your VAC on deposit until you retire from IMRF, at retirement you may choose to receive your Voluntary Additional Contributions as either:
- A lump sum
- A monthly annuity if your VAC balance is $4,500 or more. Employers do not contribute to this annuity.
You can log in to your secure Member Access account and create a pension estimate to review lump sum and monthly pension amounts of your VAC on deposit plus interest to the date of your estimated retirement. You must have VA contributions on deposit to create a VAC pension estimate.