Unlocking the Hidden Potential of the Wisconsin Retirement System (WRS): After-Tax Contributions

Boost your Wisconsin government employee pension through after-tax contributions.

If you’re planning on your pension as a major source of income in retirement, this video is designed to help you make sure you’re maximizing your monthly income. Whether you’re a Wisconsin teacher or government employee, understanding this feature works within the Wisconsin Retirement System (WRS) could significantly boost your pension or retirement savings. Let’s dive into the rules, benefits, and practical steps for making these contributions work for you.

The Basics of After-Tax Contributions

The first thing to understand about after-tax contributions to the WRS is that they’re optional and entirely separate from the mandatory contributions you and your employer already make. Here are the essential rules:

1. Eligibility: You must be actively employed by a WRS-participating employer to make after-tax contributions. If you have a future WRS pension in your sights, you’re eligible.
2. Tax Implications: These contributions are made after-tax, meaning you don’t get a tax deduction upfront. However, the money you contribute is tax-free when withdrawn, and any investment growth is tax-deferred. Keep in mind that the earnings on these contributions will be taxed when you take them out.
3. Ways to Contribute: You can make after-tax contributions in three ways:
   • Online: Use the WRS member portal to transfer funds directly from your bank account.
   • Payroll Deduction: Ask your HR department to set up automatic deductions from your paycheck.
   • Direct Payment: Send a check along with a remittance form to the Department of Employee Trust Funds (ETF).

How to Contribute

Contributing online is straightforward. Visit the ETF website, locate the additional contributions section, and follow these steps:

1. Enter your Member ID, found on your annual benefits statement.
2. Specify the amount you want to contribute and choose a payment date.
3. Input your banking information for a direct transfer.
4. Confirm the transaction and accept the terms and conditions.

If you prefer to contribute by check, fill out the “Additional Contributions Remittance Form,” include your Member ID, and mail it with your check to the designated address. For payroll deductions, consult your HR department to set up the process.

Timing is Key

Remember, WRS contributions begin earning interest in the year following your deposit. For example, if you contribute in December 2025, interest accrual starts in January 2026. To maximize growth, aim to make contributions early in the year.

Options for Withdrawing Contributions

Once it’s time to retire, you have several options for accessing your after-tax contributions:

1. Boost Your Pension: Convert your contributions into an additional monthly lifetime payout. This option provides steady income throughout retirement.
2. Roll Over Funds: Transfer your contributions into another retirement account, such as an IRA, for greater control over your investments.
3. Period-Certain Payments: Opt for a payout over a specific timeframe, ranging from 24 months to 180 months (2 to 15 years). This choice can provide predictable income while you delay claiming Social Security benefits or bridge other income gaps.

Why Consider After-Tax Contributions?

One compelling reason to make after-tax contributions is the guaranteed 5% interest (as of 12/31/2024) embedded in the period-certain payment option. While banks and other investment accounts often struggle to match this rate, WRS offers a reliable and competitive return. This option is especially useful if you plan to delay Social Security, as it can provide a temporary income stream during the interim.

After-tax contributions to the Wisconsin Retirement System are an often-overlooked strategy for enhancing your retirement security. By taking advantage of this option, you can:

• Increase your monthly pension payout.
• Create a tax-efficient savings pool.
• Benefit from competitive interest rates and flexible withdrawal options.

If you’re ready to maximize your WRS benefits, consider exploring after-tax contributions today. Whether you choose to contribute online, through payroll deductions, or by direct payment, this strategy can help you achieve a more secure and comfortable retirement.

Links:

• Wisconsin Department of Employee Trust Funds
• Wisconsin Retirement System Resources – WEA Member Benefits
• Brochure – https://etf.wi.gov/resource/additional-contributions
• Additional Contributions Form – https://etf.wi.gov/resource/additional-contributions-remittance 
• How to Decide the Right Time to Take Your Pension – Mr. Retirement YouTube

Connect With Jeremy Keil:

• Mr. Retirement YouTube Channel
• LinkedIn: Jeremy Keil
• Facebook: Jeremy Keil
• LinkedIn: Keil Financial Partners

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