This is the third post in our new series, based on members' real questions to us.
Update: Effective August 28, 2020, Missouri state law has been amended to expand employers’ options for the employee contribution election from a 0% or 4% employee contribution amount to a 0%, 2%, 4% or 6% employee contribution amount. Click here to learn more.
Your LAGERS subdivision may require you to contribute 4% of your gross salary to LAGERS.
However, the 4% is an AFTER tax contribution.
What this means for you is when you retire and start receiving your LAGERS benefit, part of your payment will be non-taxable. The part NOT considered your contributions will be considered income and subject to income taxes.
To be clear, this 4% contribution neither increases nor decreases your lifetime monthly benefit.
You are simply helping your employer pay the cost of funding your benefit. Your benefit is calculated by taking your subdivision's benefit multiplier (which can be anywhere from 1.00% - 2.50%) and multiplying it by how many years of service you have worked and then multiply that by your final average salary. Again, whether or not you contribute 4% of your monthly income while an active employee, it does not affect how much you will receive in retirement.
Though your contributions do not affect the amount of your retirement benefit, we do keep track of how much you have contributed toward your benefit. We do this because your contributions are guaranteed to be paid back to you through either a refund, lump sum or monthly benefit.
No matter what happens, this money WILL come back to you in one shape or form.
To learn more about your contribution, visit our website.