All regular full-time employees will be automatically enrolled in a defined benefit pension plan administered by Municipal Employees’ Retirement System (MERS). Participation in the pension program is mandatory.
What is a Defined Benefit?
A defined benefit pension plan is a type of pension plan that provides a fixed, pre-established benefit for employees at retirement based on their final average compensation (FAC), service credit and benefit multiplier. The defined benefit formula is as follows:
FAC x Service Credit x Benefit Multiplier = Annual Benefit
Benefit Details
Employees hired before 01/01/2012:
- Benefit multiplier: 2.25%
- Final average compensation (FAC): 3 highest consecutive years
- Vesting: 8 years
- Retirement eligibility: 55/25
- Employee contribution: 6% of gross pay
- Other: E-2 COLA
Employees hired after 01/01/2012:
- Benefit multiplier: 1.5%
- Final average compensation (FAC): 3 highest consecutive years
- Vesting: 8 years
- Retirement eligibility: 60
- Employee contribution: 4% of gross pay
myMERS
The myMERS portal is a secure online tool that allows employees to manage account balances, review beneficiary information, retrieve statements and obtain forms. We strongly encourage employees to register for a myMERS account.
Deferred Compensation
WCRC offers employees a great way to save for retirement with optional, voluntary savings. The MERS 457 Program is designed especially for people in the public sector. With this program, you can set up an investment account where part of your salary is automatically contributed and invested for when you leave your job. You get to decide if you want to participate, how much to contribute, and how to invest your money, all through easy payroll deductions. When you leave, your benefit will depend on the total amount in your account. You can change your contribution amount at any time.
Contribution Limits
The MERS 457 Program has annual contribution limits set by the IRS. You can contribute up to the maximum allowed each year, and if you’re 50 or older, you may be eligible for additional “catch-up” contributions. The specific limits can change annually, so it’s a good idea to check the latest guidelines or ask Payroll or HR for the current year’s limits. You can adjust your contribution amount anytime, but just make sure you stay within the annual limits set by the IRS.
Enrollment
To enroll in the MERS 457 Program, simply complete the enrollment form and submit it to either Payroll or HR. On the form, you will need to select a dollar amount for your contributions, rather than a percentage of your salary. Once your form is processed, your contributions will be automatically deducted from your paycheck and invested according to your selections. If you need any assistance or have questions about the enrollment process, please contact Payroll or HR for support.
Pre-Tax or Roth
Pre-Tax
With a pre-tax election, you make contributions from your pay check BEFORE any taxes are taken out, so you get a tax break up front, helping to lower your current income tax bill and putting more money into your investment account to earn dividends.
Your money – both contributions and earnings – grow tax-deferred through investment gains over time until you withdraw them. At that time, withdrawals are considered to be ordinary income and taxed at the current rate when withdrawn.
Roth Savings
With a Roth contribution, it’s basically the reverse. You make your contributions with after-tax dollars, meaning there’s no upfront tax deduction. However, withdrawals of both contributions and investment earnings are tax-free at age 59 1/2, as long as you’ve held the account for at least five years.
So it all comes down to deciding when it’s better for you to pay the taxes – now or later.
Helpful Links
Related Documents
457 Plan Overview
Change Your Beneficiaries Online
Rollover Guide
Related Forms
MERS 457 Enrollment Kit
Incoming Transfer Form
Deferred Compensation Contribution Change Form
