Dear Member:
Until 2000, the contribution to a member’s Annuity Savings Account (ASA) was set by the Indiana General Assembly at a mandatory rate of three percent (3%) of compensation. In 2000, the Indiana General Assembly enacted a provision that allows members of the Public Employees’ Retirement Fund (PERF) and the Teachers’ Retirement Fund (TRF) to elect to make voluntary contributions in addition to the mandatory three-percent (3%) contributions. That change allowed any member to increase their Annuity Savings Account contributions up to an additional ten-percent (10%) of compensation per pay period on a post-tax basis only. The statute also authorized pre-tax contributions if a favorable ruling was received from the Internal Revenue Service (IRS). PERF and TRF subsequently sought such a ruling on August 3, 2000.
On April 10, 2003, PERF and TRF received approval from the IRS to permit eligible members to make additional voluntary contributions to their ASA on a pre-tax basis. Beginning in September 2003, members who have five years of PERF or TRF service will be able to make these additional contributions with pre-tax dollars.
Under the IRS ruling, some very important limitations apply. First, you must be an active member of PERF, currently employed in a PERF-covered position. Second, you must have five (5) years of PERF and/or TRF service as of the eligibility date (June 30 of each year) in order to participate. Third, you have two (2) years in which to make an election. That two-year “window” begins on the September 1 following the start of your eligibility. Fourth, as a condition of the ruling, an election to make pre-tax contributions may not be changed or stopped until you retire, terminate, or die. The IRS requires that the election be irrevocable and unchangeable. In addition, state law establishes a 10% limit on the total of pre-tax and post-tax voluntary contributions.
Effective (insert date) your employer has elected to provide you with this new retirement savings option. If you wish to participate and meet the eligibility requirements, you may request an Irrevocable Payroll Deduction Authorization form from your Human Resources or Payroll Department
Attached to this letter is a list of questions and answers which PERF has provided that we hope will be helpful in explaining how voluntary contributions will work. In addition, you may call PERF at their toll-free number [888] 526-1687 or e-mail PERF from their web site at with your questions.