Ask Terry Questions Voluntary Contributions for IMRF

Voluntary Contributions for IMRF

By Terry Savage on November 21, 2022 | Financial Planning / Retirement

Terry,
I am employed by a school district and contribute to a 403b. I have the opportunity to contribute up to 5% of my salary to a savings account that currently has a 7.25% interest rate. I have a Roth IRA and will get a pension from my ex. I am 48, divorced, 1 kid in college (He picked the best school with the most merit and financial aid thanks to you!), and 2 teenagers. Would this VAC be a good place to put additional money? I am trying to see the down side to it.
Thank you so much!

Terry Says

I’m not sure exactly what this investment is that is paying 7.25%. In your headline you mention the IMRF — Illinois Municipal Retirement Fund, one of the best-managed pension funds over the long run. It is NOT connected to any of the state’s woefully underfunded public employee pension funds!

Could you please write back with more details? Is this additional contribution tax-deductible, and is it to an IMRF money fund?
The downsides there are the same as with any other retirement savings — a 10% penalty, plus taxes if you withdraw before age 59-1/2.
But I want to make sure we are talking about the same thing!

PS. Glad you’re doing so well. Hope your ex is contributing to college. Save as much as you can!!

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