SN 12-4-2021

Page 6/The Sun and News, Saturday, December 4, 2021

James Gemmell
Contributing Writer
The Gaines Township
Board Investment Committee
held its inaugural meeting in
November.
The board voted unani-
mously in early September to
establish the five-member
ad-hoc committee. At that
time, it had identified four
committee members and was
looking to add a citizen with
financial experience to com-
plete the committee.
Treasurer Laurie Lemke
said in a Nov. 29 interview
at the township hall that
Cindy Varney – Grand
Rapids branch manager for
Macatawa Bank – was the
fifth person appointed to
the panel. The other mem-
bers are Lemke, Deputy
Treasurer Jenna Pilkington,
Township Manager
Jonathan Seyferth and
Trustee Bob Terpstra.
“I don’t think there were
any major concerns that were
brought to light by the com-
mittee in the first meeting,”
Seyferth said in a telephone
interview. “But, as we go
forward, we are going to take
a look and see what some
other communities do –
whether they’re set policies,
guidelines or whatever – and
see how we can inform that
into our investment commit-
tee to see if there are any
changes that would need to
be made.”
The township board voted
in July to switch from TCF to
Macatawa as its primary
bank. After TCF merged

with Chemical Bank in 2019,

Lemke said the township

began being charged for fees

“that we never had to pay

before. And I wanted to do

business with someone who

has a brick-and-mortar build-

ing in our township, as I do

have to visit the bank quite

often.”

Township Supervisor Rob

DeWard asked the board

after the July vote if it had

made a mistake switching

banks before forming the

investment committee.

“In light of the fact we’re

looking at investment poli-

cies, shouldn’t that group

have been involved in that

research?” he asked.

At the township board’s

meeting in June, auditor

Dan Veldhuizen with the

Siegfried Crandall PC certi-

fied public accounting firm

recommended that a banker

be a part of the investment

committee. He also suggest-

ed that the township update

its investment policy and

procedures manual. The pol-

icy has not been updated

since 2010.

In addition, Veldhuizen

recommended the township

diversify its investment port-

folio, which included 27 cer-

tificates of deposit entering

2021.

“That’s a lot ... you don’t

[get] much of a return on

CDs,” he said at the time.

Lemke said the township

earned about $80,000 from

its investments in CDs during

the prior year.

Seyferth is not taking a

stance on how the township

invests its money.

“I think I’m going to

reserve comment on that

until the committee has had a

chance to look at it,” he said,

citing his role on the com-

mittee as essentially a staff

consultant who provides the

committee with information.

“I’m more of a neutral party,

if you will.”

Lemke said she likes to

have as much township

money as possible covered

by the Federal Deposit

Insurance Corp., and that is

why so much of it is invested

in relatively small amounts

in the form of CDs. The

FDIC insures up to $250,

per deposit, per insured bank.

“That is kind of my go-to

increments” for investing,

Lemke said.

The newly formed invest-

ment committee “looked at

all the township invest-

ments” at its first meeting in

November, she said. Whether

the township will diversify

its portfolio to include fewer

CDs is uncertain right now,

she said.

“It depends on what the

interest rates do. I’ll still

invest the township where I

can get the greatest revenue

back ... and the most for

safekeeping. That will still

be in my foremost plan. But

I’m pretty cautious with

township funds.”

However, Lemke men-

tioned that the investment

committee told her to “feel

free to invest large

amounts,” noting that the

chances of a bank failing

right now are “very, very

low. If it does, another bank

is going to swoop in and

take over.”

Seyferth said it was good

for the committee to have a

broad discussion about

investment practices in its

first meeting. He said he

expects there will be more

meetings in the spring,

resulting in a policy update

for the township board to

consider.

What to know about early IRA

withdrawals

While you’re working,

you may be contributing to

an individual retirement

account (IRA), which can

provide a tax-advantaged

way to save for your future.

So, is it ever a good idea to

tap into your IRA before

you retire?

Ideally, you should leave

this account intact until

your retirement. After all,

you could spend two or

more decades in retirement,

so you’ll need a lot of finan-

cial resources. Still, life is

unpredictable, so there may

be times you’ll consider

taking money from your

IRA. You’ll need to be

aware, though, that if you

withdraw funds before you

turn 59½, you will general-

ly trigger a 10% penalty.

Plus, you’ll be taxed on

whatever you take out,

thereby losing, at least in

part, the benefits of tax-de-

ferred earnings offered by a

traditional IRA. (With a

Roth IRA, you can with-

draw your contributions

free of taxes and penalties,

but the earnings may be

taxed and penalized if you

take them out before you’re

59½.)

If you need to withdraw

funds from your IRA before

you’re 59½, you may be

able to avoid the 10% early

withdrawal penalty if you

meet an exception, such as

one of these:

• Paying for college


• You are allowed to take

penalty-free withdrawals to

pay for tuition and other

qualified higher education

expenses for you, your

spouse, children or grand-

children. However, since

the withdrawals may be

considered taxable income,

they could reduce the stu-

dent’s eligibility for finan-

cial aid.

• Buying a first home –
  You and your spouse can
  each withdraw up to
  $10,000 from your respec-
  tive IRAs to buy your first
  home. To qualify as a first-
  time homebuyer, you (and
  your spouse) need to have
  not owned a home for the
  two years preceding your
  home purchase.


• Having a child – Fol-
  lowing the birth or adoption
  of a child, you and your
  coparent can each withdraw
  up to $5,000 from your
  respective IRA without
  paying the 10%penalty.


• Covering medical
  expenses – You may be able
  to avoid the early withdraw-
  al penalty if you use the
  money to pay for unreim-
  bursed medical expenses
  (for you, your spouse or
  dependents) that exceed
  7.5% of your adjusted gross
  income. You may also qual-
  ify to take a withdrawal
  without penalty to pay for
  health insurance premiums
  if you are unemployed. In
  the case of a disability, the
  10% early withdrawal pen-
  alty also may not apply.

These aren’t the only

exceptions to the 10% with-

drawal penalty, but they do

cover many of the common

reasons that people may

consider an early withdraw-

al from their IRAs. And if

you do need to take an early

withdrawal, consult with

your tax advisor to deter-

mine your eligibility for

avoiding the 10% penalty.

Keep in mind, though,

that you do have ways to

potentially reduce the

necessity of withdrawing

from your IRA early. One

proven technique is to build

an emergency fund contain-

ing at least three to six

months’ worth of living

expenses, with the money

kept in a liquid account.

You might also consider

opening a line of credit. A

financial professional can

help you explore other

options, as well.

Ultimately, if you can

leave your IRA intact until

you retire, you’ll be helping

yourself greatly. But if you

do need to tap into your

account early, at least be

familiar with the possible

drawbacks – and how you

might avoid them.

This article was written

by Edward Jones for use by

your local Edward Jones

Financial Advisor.

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Gaines committee scrutinizes investments