MERS IRA

Flexible saving options for you and your spouse

Opening a MERS IRA is a great way to build retirement security through tax-advantaged saving, with flexible withdrawals that can help you reach your other financial goals at the same time. It is also a smart choice for bringing diversity to your investment portfolio with MERS’ professionally-managed, low-cost investment choices.

Who Is Eligible?

To be eligible to open a MERS IRA, you must be a current or former employee of a Michigan municipality. You do not have to have participated in a MERS retirement plan or MERS 457 program directly.

Spouse Eligibility
The spouse of an eligible IRA owner (as above) is also eligible to open and contribute to a MERS IRA if they are married and file a joint tax return. The eligible employee must have established a MERS IRA for themselves (but do not have to put any money in it) in order for their spouse to open one. The spouse’s IRA is established in their own name and with their Social Security number. Once established, it is their sole property.

Roth vs Traditional

Roth vs. Traditional IRAs

MERS offers two types of IRAs:

A Roth IRA provides tax-free income in retirement
A Traditional IRA allows tax-deductible contributions now

Both will allow you to withdraw your money at any time without penalty for qualified expenses.

These can include:

Education expenses for you, your spouse, your child or grandchild

Buying or building your first home (up to $10,000)

Some medical expenses

However, there are some key differences between Roth and Traditional IRAs. Understanding those differences can help you determine which type is right for you.

	Roth	Traditional
Tax Advantages	Contributions are made post-tax; qualified withdrawals provide tax-free income.	All or a portion of contributions may be tax-deductible; all withdrawals are subject to income tax.
Income Restrictions	You must be earning taxable income, however, income limits apply.	You must be earning taxable income. There is no income limit.
Age Restrictions	None	None
Early Withdrawal (Before Age 59½)	Before age 59½, you can withdraw your contributions at any time for any reason, without penalty or need to pay income tax. However, if you withdraw the earnings on your contributions, you will pay income tax on the amount and a 10% penalty may apply.	Before age 59½, you will pay income taxes on the amount you withdraw and a 10% penalty may apply.
Taxes on Withdrawals (After Age 59½)	After age 59½, withdrawals are tax-free, so long as your account has met the 5-year holding period requirement.	After age 59½, you will still have to pay income taxes on any withdrawals.
Required Minimum Distributions (RMD)	There are no required withdrawals.	You must start receiving distributions from your Traditional IRA by April 1 of the year following the year in which you reach age 72 (or 70½ if you reach age 70½ before 12/31/2019).

MERS Investments

The MERS IRA is a participant-directed account, meaning you take an active role in determining your financial goals, making investment choices, and monitoring your portfolio. The decisions you make today will affect the results you see tomorrow.

Please remember, it’s always a good idea for you to review your investment options on a regular basis because investment objectives can change due to changes in your life circumstances, risk tolerances, or finances.

For more information, please read Understanding the MERS Investment Menu.

IRA Contribution Limits

There are annual contribution limits (total for all IRA’s under your name) that are subject to change annually. For the most up-to-date limits, see the Contribution Limit Guide or contact the MERS team at Empower at 833.500.6377.