Members of the system contribute 7.9% (effective 7-1-08) of their total earnings, deducted before taxes, from each payroll check.
Earnings covered include all salary remuneration to the member for services rendered whether included under a contract or not. Not covered for contribution purposes are reimbursements, lump-sum payments for unused, accrued sick leave and early retirement incentive payments.
The employer (school board, institution of higher learning, state agency, etc.) contributes an amount equal to 10.9% (effective 7-1-07) of a members’ total salary. The employer contribution will increase by.75% each year until July 1, 2011 when the employer contribution will be 13.9%.
Contributions made by the member after July 1, 1983 are deferred from federal income tax based upon a ruling by the Internal Revenue Service. Member contributions are exempt from taxes by the State of New Mexico as well. (Section 414 (h)(2) of the IRS Code). The contributions will be taxed when the member terminates employment and begins receiving a benefit as either a one-time refund or a lifetime retirement benefit.
