Flexible savings options
The MERS IRA is a tax-advantaged Individual Retirement Account for the exclusive benefit of current and former employees of Michigan municipalities and their spouses.
What makes a MERS IRA right for retirees like you?
- You can simplify your finances by rolling your outside retirement accounts into a MERS IRA
- There’s no age limit on who can open an IRA
- So long you as you (or your spouse if you file jointly) have earned income, you can still contribute to your IRA
- A Roth IRA has no required minimum distributions during your lifetime, making it a good way to invest money you plan to leave to your heirs
- You may be able to withdraw funds penalty-free to pay for qualified education expenses for you, your spouse, your child or grandchild
- With no required minimum distributions during your lifetime, a MERS Roth IRA makes a great estate planning tool. Regardless of their age, your heirs will be able to withdraw funds without penalty or paying income taxes (withdrawal of earning is subject to a 5-year holding period rule).
Who Is Eligible?
To be eligible to open a MERS IRA, you must be a current or former employee of a Michigan municipality. Once you open a MERS IRA, your spouse will also be eligible for a MERS IRA, so long as you file a joint tax return.
Types of IRAs
• A Traditional IRA
• A Roth IRA
Understanding those differences can help you determine which type is right for you.
Understanding Traditional vs Roth
| 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). |
Distributions/Withdrawals
You can withdrawal from your MERS IRA at any time. Taxes, fees, and any applicable penalties depend on your plan type and individual circumstances.
The MERS team at Empower will support you through the withdrawal process. Call 833.500.6377 or log in to your online account to get started.
Required Minimum Distributions
After you have terminated employment and reached age 73, you (or your beneficiary) must begin taking minimum distributions from your plan every year. This IRS mandatory withdrawal is called a Required Minimum Distribution. Your initial distribution can be deferred until April 1 of the following year if you’ve reached the age 73 (if you were born 1/1/1951 or after), age 72 (f you were born before 1/1/1951), or age 70½ (if you were born before 7/1/49); unless you have recently left your employment. If so, next year you’ll receive your distribution by April 1 and at the end of the year to cover the current year.
Example: You turn age 72 in August 2022. You defer your first required distribution until April 2023. Your second required distribution will occur by December 2023. Your distribution is subject to income tax withholding. If you do not take your required minimum distribution when required, there is a significant IRS penalty.
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.
Rollovers
With a MERS Roth or Traditional IRA, you can roll over funds from our outside retirement accounts, making it easy to manage your finances in one place. Our Rollover Guide provides a quick summary of which account types can be rolled into your Traditional IRA and which types you’ll want to roll into a MERS Roth IRA.
Funds in your MERS Roth or Traditional IRA are available to you at any time, although taxes and penalties may apply if certain criteria are not met. These criteria are different for Roth and Traditional IRAs.
We’re here to help
Our Service Center offers friendly, knowledgeable, over-the-phone assistance for a wide variety of benefit questions and issues. Contact the MERS team at Empower at 833.500.6377.
The MERS team at Empower is available:
• Weekdays: 8:00 a.m. to 10:00 p.m.
• Saturdays: 9:00 a.m. to 5:30 p.m.
• Automated system available 24/7
Resources
Online Access
Want to change your investments, or your named beneficiary? Sign in to your online account.
MERS Investments
Understanding the MERS Investment Menu (pdf)
Learn More
For more information view the
Open a MERS IRA
If you already have one of our products, or you are the spouse of one of our participants, you can open an IRA online, click the “Enroll” option on the top left of the website.
Disclosures
Fee and IRA Disclosures (pdf)