You heard about it at the monthly meetings, well now it is here. Effective, January 1, 2021 participants will be permitted to make post tax contributions to the Plan. If you are interested in trying to be in a stronger position to retire, and can afford to squirrel away some money, this option may be of interest to you.

Quick facts about the Plan’s voluntary contribution program:

  1. It is not mandatory. Do or do not or do it when you can.
  2. Between what your employer contributes into the MPP&T and that in which you voluntarily make on an after-tax basis during any calendar year cannot exceed the lesser of the sum total of $58,000.00 or 100% of your annual compensation.
  3. Your voluntary contributions are made by you, either by check or by systematic direct deposit. If contributing by a check, make the check payable to the Local 697 MPP&T. Once the check clears your bank, your voluntary contributions are sent to be deposited into your MPP&T account at Vanguard.
  4. If you want to take advantage of a systematic debit, call the Fund office for the form or download it from the Plan’s website.
  5. Your voluntary contributions will be invested in the same manner that you have elected to invest your employer contributions.
  6. Voluntary contributions are tracked separately so that principal contributions are not taxed twice upon withdrawal.
  7. However, be advised that the interest earned on these after-tax contributions are taxable.
  8. You may withdraw your voluntary contributions at any time, however, the Internal Revenue Service (IRS) requires that you be issued the proportional share of interest made on the withdrawn amount. That interest amount is considered taxable income in the year that it is issued. Therefore, you will be issued a 1099R tax form only for the earned interest for the tax year in which you received said monies.
  9. Again, you will not receive a tax form or be taxed on the after-tax contributions you make to your MPP&T account. You will only be taxed on the interest that these after- tax contributions make and only on the proportional share of interest on the voluntary monies that you withdraw.

The coronavirus has us reevaluating many of our existing beliefs and habits and has forced many changes. Perhaps our thoughts, habits and beliefs surrounding retirement savingsshould change as well. If interested, it may be beneficial to take a few minutes to evaluate your financial situation and whether or not making a voluntary contribution to your MPP&T account makes sense for you and your family.

Some points to consider are:

A. People who stick to their long-term savings plans are generally putting themselves in a stronger position to reach their retirement goals.

B. Time is your friend. If retirement is a long way off or your plans to access these monies are a long way off, the longer you have the monies invested, the greater the chance of you meeting your retirement goals.