Plan Information FAQs
Here we address the answers to many questions we receive from participants about their Plan accounts. If you need more information or would like to speak directly with us about your account, don't hesitate to contact us.
- General Deferred Compensation
- Enrolling in the Plan
- Contributions, Investment Options, and Special Circumstances
- Receiving Your Benefits
- Financial Hardships
- Personal Rate of Return (PRR) on Statements
- General and Administration Information
General Deferred Compensation
What is deferred compensation and the New York Deferred Compensation Plan?
The Plan was created for New York State public employees only. The Plan gives public employees an additional retirement savings plan with a variety of investment options, investment educational programs and related services to help State and local public employees achieve their retirement savings goals. To learn more, please visit What is NYSDCP?
How does the Plan help me prepare for retirement if I already have a pension and Social Security?
People are living longer, healthier lives and enjoying even more time in retirement. Being retired longer and considering how inflation causes things to cost more every year, a pension and Social Security may not be enough to last you and your spouse 20 years or more. The Plan is a voluntary, additional way to save for retirement.
What does tax deferred mean?
The amount you contribute pre-tax into your account is not subject to current federal or New York State income taxes. Your contributions and any earnings have the chance to grow tax deferred until you withdraw your money, generally in retirement. Your withdrawals will then be taxed as ordinary income, when you may even be in a lower tax bracket.
If the Plan is tax deferred, do I ever pay taxes?
Yes. When you are ready to take money from your pre-tax account, your withdrawal will be subject to federal income taxes. The payment of state income taxes will depend on your state of residence when you are receiving benefits from your Plan account. Learn more about withdrawals taken from the Plan.
How does the amount I contribute affect my income tax?
Your current federal and New York taxable income is reduced by the amount of money you defer. For example, if your salary is $39,000 and you defer 3% of your salary, or $1,170 ($45 per pay x 26 pays per year), your income for federal and New York State income tax purposes will be $37,830.
Are there other benefits besides income tax deferral?
Potentially building additional retirement savings means you'll have greater financial independence and you won't have to rely solely on your pension and/or Social Security for retirement income. By participating in the Plan, you also have access to resources, education, and individual attention to help with your deferred compensation account as you plan for retirement and your life in retirement.
How are Roth contributions different?
Roth contributions are made after-tax and do not reduce your taxable income when made. Roth contribution accounts grow tax deferred but with withdrawals, if qualified, are received tax free. Learn more about Roth contributions.
How is The Plan different from an IRA?
- Offers the convenience of payroll deductions, which can keep you disciplined when it comes to saving for retirement.
- May allow you to defer larger amounts of money (up to $18,500 in 2018). Your right to use the Plan is not limited by any income level that may be imposed for IRAs. Learn more about contribution limits.
- If separated from service, does not incur a 10% tax penalty for distributions taken before age 59½.
How do I know if the Plan is right for me?
Not many people can say they're too prepared for retirement. No matter what your age or your situation, you should be preparing financially for retirement. Learn more about why you should participate in the plan.
Is the Plan good for those close to retirement?
Yes. The Plan offers you an opportunity to defer benefit payments until as late as age 70½ or as long as you're still working. When you retire you may be in a lower tax bracket. In addition, any earnings on your contributions will accumulate tax deferred until distribution. The Plan also permits those who are nearing initial eligibility to retire with full benefits or who are age 50 and over to contribute greater amounts for their retirement. Learn more about investing when retirement is close.
Do deferrals affect my Social Security taxes or pension contributions?
No, your Social Security taxes and pension benefits, if any, will be calculated on the basis of your gross wages.
Enrolling in the Plan
How do I enroll in the Plan?
Enrolling in the Plan is one of the most important decisions you can make while working for New York State or a participating employer. For more information, check out get ready to enroll.
Once I enroll, when do my payroll deductions start?
Your enrollment application will be processed by the Administrative Service Agency upon receipt. Payroll deductions will be implemented as quickly as administratively possible beginning in the month following your election to participate. Because of payroll timeframes, your deductions may not occur for up to two payroll periods.
How do I keep track of my Plan account?
There are three primary ways to track your account information.
- You will receive quarterly account statements, sent to your address or email address of record, describing how your Plan account is performing.
- Call the Plan to obtain account information through the automated Voice Response System (VRS). Frequently requested Plan account information is available directly from the VRS 24/7. All you need is your Plan account number and Personal Identification Number (PIN) to access the VRS.
- Access your account information online. Set up your online account by using your Plan account number, Social Security number and birth date to verify your identity.
Contributions, Investment Options and Special Circumstances
How much may I contribute from my paycheck?
The minimum you can contribute per pay period is $10. You may contribute up to 100% of compensation after any required salary deductions (such as retirement system contributions, Social Security and Medicare taxes, health plan premiums, union dues, etc.). Learn more about contribution limits.
May I change the amount I contribute to the Plan?
Yes. You may increase, decrease, or suspend your contributions by calling the HELPLINE or by accessing your account online. All changes will be implemented as quickly as administratively possible beginning in the month following your election to change your deferral percentage. However, because of payroll timeframes, your deferral change may not occur for up to two payroll periods.
What if I start contributing to the Plan in the middle of the year at a rate designed to produce the maximum contribution by year-end, but which if made for a full year would result in excess contributions?
Your deferral rate will not be changed until you inform the Plan. If you want your deferrals taken more evenly throughout the year, you should adjust your deferral percentage. This can be done by calling the HELPLINE or accessing your account online. Otherwise, your deferral rate will remain the same and payroll deductions will be automatically stopped when you reach your maximum contribution level. However, it is your responsibility to monitor the total contribution.
What if I have not contributed to the Plan for a while and have decided not to contribute in the future?
You may keep your contributions in the Plan and continue to build savings for retirement. However, you may withdraw your contributions if you:
- Have a Plan account balance of less than $5,000, exclusive of any assets you may have in a rollover account, AND
- Have not contributed to the Plan in the last two years, AND
- Have not used this Plan provision before.
When do I pay income taxes?
When you receive distributions from the pre-tax portion of the Plan, those distributions are taxed as regular income. The payment of state income tax will depend on your state of residence when you are receiving benefits from your Plan account. New York State residents who are at least age 59½ and take payments over at least two calendar years are eligible for a state income tax deduction of up to $20,000 each calendar year on distributions received from the Plan.
What happens to the money that is withheld from my paycheck?
When you become a participant in the Plan, you select how you want your contributions to be invested. The Plan provides numerous investment options. Review the Plan investment options to learn more about the different options and their performance.
May I divide my contribution among the different investment options?
Yes. You may allocate your contributions in any whole percentage among the Plan investment options.
How do I exchange or reallocate amounts from one investment option to another?
You may exchange existing balances from one Plan investment option to another, depending on restrictions imposed by the Plan. All exchange requests received prior to the close of the NYSE (normally 4 pm ET) will be processed at that day's closing price. Exchanges may be initiated by calling the HELPLINE or accessing your account online.
What are the restrictions and redemption fees on making exchanges between investment options?
The Plan restricts certain exchanges between investment options. For more information, read more about managing trading restrictions.
Are there any expense reimbursements paid by investment options?
A number of mutual fund companies pay reimbursements to the Plan for performing administrative functions they would normally perform themselves. Learn more about mutual fund reimbursements.
Are there any other restrictions on exchanges between investment options?
In addition to the specific exchange restrictions previously described, each mutual fund may impose other exchange limitations. These restrictions are generally included in the prospectus of each mutual fund. Exchanges in excess of the exchange limitations imposed by a mutual fund may result in restrictions being placed on the account of the participant or the rejection of an exchange request. Learn more about the exchange restrictions by reading the profiles and prospectuses or by calling the HELPLINE.
Are there any times when I can contribute more under the Plan?
Yes. The Plan permits those who are nearing initial eligibility to retire with full benefits or who are age 50 and over to contribute greater amounts for their retirement and those who are called away from their regular job to perform duty in the United States Military. Learn more about qualified military service makeup and catch up contributions.
What if I take a job with another employer?
If you leave State employment or your position with a participating employer, there are a number of options available to you. First, you can keep your retirement assets in your account which will allow you to continue all the benefits of Plan participation (numerous investment options, tax deferred growth of assets) while keeping fees competitive. Continuing your participation in the Plan provides you with access to your assets at any time you need additional funds. You are also eligible to receive payments from your Plan account through a payment option.
If your new employer sponsors a Section 457(b) eligible deferred compensation plan, you may also transfer all or a portion of your Plan account balance directly to that employer's plan as long as the other plan will accept the transfer. In the case of a transfer, the amount transferred will not be treated as current taxable income.
If your new employer sponsors a 401(k) or 403(b) plan, you may roll over all or a portion of your Plan account balance to the plan sponsored by your new employer as long as that plan will accept the transfer. Please note that the tax consequences, distribution options, investment options, and participation costs in a 403(b) or 401(k) plan may differ from the Plan. It's important to examine the requirements and limitations of any plan to which you consider rolling over your Plan account balance. You should also compare fees between the Plan and any other plan where you may be looking to roll over your assets. Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds. Assets rolled over from your account(s) may be subject to surrender charges, other fees and/or a 10% tax penalty if withdrawn before age 59½.
What if I return to work with the State or an employer that participates in the Plan?
If you return to work for the same State agency or another State agency, you can either:
- Declare yourself as separated from service which would allow you to receive distributions from your Plan account; or
- Resume payroll contributions to your Plan account thereby forfeiting your right to take distributions until you separate service again.
If you return to work for an employer that participates in the Plan, you can re-enroll through that employer and begin contributions. With regards to your former deferred compensation account, you can either
- Leave it as a separate account with the ability to take distributions at any time in the future; or
- Combine it with your deferred compensation account with your new employer, thereby forfeiting your right to take distributions until you separate from service again. It is important to speak with a HELPLINE representative or your account executive to discuss your personal situation and preferences.
Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds. Assets rolled over from your account(s) may be subject to surrender charges, other fees and/or a 10% tax penalty if withdrawn before age 59½.
Can I rollover my Plan account into an IRA?
Yes. Participants who are eligible for a distribution may rollover all or a portion of those assets to an IRA.
What happens to my Plan account if I go through a divorce?
If under a court's decision or an agreement, your former spouse has an interest in some or all of your Plan account, a Qualified Domestic Relations Order (QDRO) will need to be filed with the Plan. Also, if you named your former spouse as a beneficiary you should complete a new beneficiary form (PDF). Read more about how to notify of a divorce.
Receiving your benefits
When can I make withdrawals from my Plan account?
The conditions under which distributions from your account may be made are:
- Separation from service, including regular retirement
- Unforeseeable Emergency Withdrawal (as defined by federal regulations)
- A Plan loan
- When you turn age 70½
- Required Minimum Distribution – when you turn age 70½, the IRS requires you take a distribution, unless you are still employed by the same employer
- Small Inactive Account provision
- Purchase service credit in a qualifying pension plan
- Absence due to qualifying military service
What is separation from service?
Separation from service occurs because of your voluntary or involuntary termination from employment, including when you retire. A leave of absence or suspension from employment is not a separation from service.
How may I receive distributions?
To initiate a payout, call the HELPLINE so that a Representative can assist you. They can help you understand your options and what makes sense for your situation. Read more about your distribution options.
When do I choose my distribution option?
When you retire or separate from service, you can leave your assets in the Plan until you are ready to make a decision about when and how to receive your distribution. Or you may decide to begin receiving distributions immediately. Withdrawals are processed once separation of service is verified.
By age 70½, however, the IRS requires that you take a Required Minimum Distribution (RMD) annually. This requirement was waived for 2009. If you stay in the Plan, you don't have to worry about calculating your RMD amount each year because we'll take care of it for you. If you leave employment prior to age 70½, you are not required to take distributions. If you remain employed, you may choose to defer payments until you retire, and your account continues to have the opportunity to accumulate tax-deferred earnings until benefits are paid to you.
Is there a time when I must withdraw money from my Deferred Compensation Plan?
If you have separated from service with New York State or a participating employer, you must begin receiving payments no later than April 1 following the close of the calendar year in which you turn age 70½. It is called your Required Minimum Distribution (RMD). This requirement was waived for 2009. Of course, you may begin receiving payments sooner, if you wish, as long as you have permanently terminated employment.
What happens if I am still employed at age 70½?
If you remain employed with New York State or a participating employer when you are 70½, you may receive your Plan distributions while you are employed or continue to defer distributions until you retire. If you decide to receive your Plan distributions, you may elect any of the distribution options previously discussed.
If I am still employed at age 70½ do I have to take a Required Minimum Distribution?
If you remain employed with New York State or a participating employer you are not required to receive a minimum distribution even when you reach 70½. The RMD requirement does not take effect until you leave service with New York State or a participating employer.
May I use my plan assets to purchase retirement service credit?
You can use your Plan assets to purchase retirement service credit that is permitted by law in a New York State or New York City public retirement system.
A participant must obtain documentation from his or her retirement system affirming his or her eligibility to purchase the service credit, such as prior service credit or veteran's credit, and the cost to purchase the service credit. A completed Retirement Service Credit Payment form and a copy of the response from the retirement system documenting eligibility to purchase service credit must be received by the Plan's Administrative Service Agency at least 15 days prior to the date that payment is due to provide sufficient processing time. The Plan will liquidate sufficient plan assets pro-rata to purchase the retirement service credit and send a check directly to the appropriate retirement system.
A confirmation of the amount of assets liquidated from the participant's account and the payment date will be sent to the participant.
How are distributions taxed by New York State?
Distributions from the pre-tax portion of the Plan are eligible for the New York State income tax deduction applicable to private retirement plans, eligible retirement plans such as 401(k) and 403(b) plans, and Individual Retirement Accounts. To be eligible for this deduction, you must be at least age 59½ and the distributions must be in the form of periodic payments (non-lump sum payments). The deduction is limited to $20,000 each calendar year.
Who is eligible for the income tax deduction?
A taxpayer who is a New York State resident and at least age 59½ at the beginning of the calendar year is eligible to deduct up to $20,000 of distributions received during the entire year from the New York State Deferred Compensation Plan, an eligible retirement plan or an IRA. A taxpayer who becomes 59½ during the calendar year may deduct those benefits received on and after the date he or she became age 59½, up to $20,000 each calendar year.
Can I claim this deduction for any distribution I receive from the Plan?
No. Only pre-selected periodic distributions are eligible for the income tax deduction. Lump sum and non-periodic payments are not eligible.
What types of distributions are eligible for the income tax deduction?
Distributions that are paid to you in periodic payments in more than one calendar year are eligible for the income tax deduction. To qualify for the income tax deduction you must select "Periodic Payments" on the Benefit Distribution form (PDF) when applying for payment; indicate that you want at least two periodic payments, and pick a schedule that will include at least two different calendar years. At a minimum, you must select two monthly periodic payments, the first to occur in December of one year and the second in January of the next year, to qualify for the income tax deduction. Most participants, however, will designate a longer periodic distribution period and will qualify for the income tax deduction for each year the participant is at least age 59½.
Can I claim this deduction if the entire amount of my Deferred Compensation Plan assets are paid to me in twelve monthly payments in a single calendar year?
No. Periodic payments are defined as a series of payments that are made in at least two calendar years. You will not be eligible for the income tax deduction if your entire Plan account balance is paid to you in one calendar year, even if your distributions were received in twelve monthly periodic payments.
If both my spouse and I are receiving distributions from the Plan and we file jointly, can we deduct up to $40,000?
Each person may deduct up to $20,000 (each calendar year) of benefits received from the Plan. If each person is receiving benefits equal to or in excess of $20,000 and both meet the age criterion, then a $40,000 deduction can be claimed.
If my distribution exceeds $20,000 but my spouse's distribution is less than $20,000, can we deduct up to $40,000 on our joint income tax return?
No. The income tax deduction is limited to the benefit amount received by each person. For example, if you receive distributions of $25,000, you can deduct $20,000. If your spouse receives $15,000 in benefits payments, an additional $15,000 can be deducted, for a combined total deduction of $35,000. You cannot claim any unused portion of your spouse's deduction.
If I am receiving distributions from my New York State Deferred Compensation Plan account and an IRA, can I deduct $40,000 (if at least $20,000 is received from each account)?
No. The income tax deduction is applied to the combined total of distributions received from all private pension plans, eligible retirement plans, IRAs and deferred compensation plans. The income tax deduction is limited to a total of $20,000.
Does this deduction affect the income tax deduction of my retirement benefits received from a New York State public retirement system?
No. The income tax deduction that applies to pension benefits received from a New York State or New York City public retirement system, including the Optional Retirement Plan, is a separate income tax deduction. The deduction for distributions received from the Plan is in addition to the deduction for public pension benefits.
What is a small inactive account?
A small inactive account is an account with a balance less than $5,000, excluding any assets you may have in a rollover account, and to which you have not made a contribution in the past two years. Learn more about how to take withdrawals from a small inactive account.
What happens if I die after I begin receiving distributions?
If your account has not been fully paid to you prior to your death, the amount remaining will be paid to your named beneficiary. If you did not name a beneficiary, the amount remaining will be paid to your spouse, or to your estate. Learn more about how to notify of a death.
What is an unforeseeable emergency withdrawal?
Federal regulations define an unforeseeable emergency as a financial emergency resulting from illness, accident, or property loss to you or your dependents resulting from circumstances beyond your control. Payments can only be made to the extent that your qualifying expenses are not covered by insurance or money available from other sources. Read more about the how to apply for an unforeseeable emergency withdrawal.
Can I take a loan against my Plan account balance?
Yes, the Plan permits loans if you are currently employed by the State or a participating employer or if you're on an approved leave of absence. Read more about how to apply for a loan.
Personal Rate of Return (PRR) on Statements
What is the Personal Rate of Return (PRR) that appears on my account statement?
Your account statement includes a “Personal Rate of Return” that represents the the performance of all the investment options you have selected in the Plan. Read more about PRR on your account statement.
What does my PRR tell me?
The PRR is designed to reflect the investment performance you actually experienced in your account over the past 12 months, or the life of your account, whichever is shorter. It seeks to measure how the funds in your account are performing while your money is invested. The PRR will differ from each fund's stated performance contained on your quarterly performance report due to timing of your personal account activity. The PRR only provides you with a total rate of return. To see how the individual funds are performing, please see the quarterly performance report.
General and Administration Information
How do I get more information about the Plan?
Learn more about how the plan works. If you have any questions about the Plan, please call the HELPLINE and a Representative will be happy to assist you.
What other services does the Plan provide?
Plan representatives can give you resources, educational material, and individual attention to help you make smart choices when you're planning for retirement. Our staff is here to help you with enrolling in the plan and then managing your account up to and throughout retirement. The information we provide is for your educational purposes only and is not intended as investment advice.
What is the HELPLINE?
The Plan's toll-free HELPLINE service is your primary resource for any inquiries concerning your Plan account or situation. The HELPLINE is a dedicated staff of full-time, licensed and FINRA-registered Representatives. They are available from 8:00 am to 11:00 pm Eastern Time, Monday through Friday, and 9:00 am to 6:00 pm on Saturday, except holidays.
Are there local Plan representatives?
The Plan's Account Executives provide local services to the Plan's participants and participating employers. They conduct individual and group education sessions at participating on-site work locations about enrolling in the Plan, investment education, and planning for retirement with the deferred compensation plan.
Account Executives have a thorough working knowledge of the terms and provisions of the Plan, applicable IRS regulations, the Plan's investment options, and procedures for accessing account information and initiating transactions. The Account Executive has experience in the financial services field and holds a Series 6 and 63 license from the Financial Industry Regulatory Authority.
Account Executives are located throughout the State. If you need assistance, you may call your local Account Executive using the telephone information provided on the map.
How do I setup my online access?
Online account access
- Click on "Login Help & Sign Up" and then "Sign Up for an Online Account"
- Verify your identity by submitting your Plan account number, Social Security number and date of birth
- Follow prompts to create a user name and password
How do I access the VRS for the first time?
HELPLINE's Voice Response System (VRS)
- User name = your Plan account number
- Personal Identification Number (PIN) = your date of birth (if you were born on February 15, 1952, your initial password is 02151952)
- Follow prompts to create a new 4-digit PIN
If I forget my PIN, how can I get another one?
Call the HELPLINE and follow the instructions for requesting a PIN reminder. Your PIN will be mailed first class within two business days to your address on file.
What kind of transactions and services are available through the HELPLINE?
Through the Voice Response Unit of the Plan's HELPLINE, you may:
- Personal account balances
- Personal deferral information
- Your Account Executive's voice mail
- Fund share prices and current estimated return of the Stable Income Fund
- Dividend information
- A transfer of funds within your existing Plan assets
- An investment change for future deferrals
Speak with a HELPLINE Representative (available from 8:00 am to 11:00 pm Monday through Friday, and 9:00 am to 6:00 pm on Saturday, Eastern Time, except holidays).
When are transactions effective?
Transactions completed before the close of the NYSE (normally 4:00 pm Eastern Time) are effective the same business day. Transactions completed at or after the close of the NYSE are effective the next business day.
Can I cancel a transaction after I receive a confirmation number?
Yes, transactions can be canceled any time before the close of the NYSE(normally 4:00 pm Eastern Time) on the same day.
When do my quarterly statements arrive?
Generally, you will receive an account statement approximately 25 days following the close of each calendar quarter. At that time, you will also receive a report on investment performance and the Plan's newsletter.
How do I change my mailing address with the Plan?
You can change your address by calling the HELPLINE and speaking to a Representative, or by sending in a Change of Address Form (PDF).
How are the Plan's administrative expenses funded?
The Plan's administrative expenses are funded by participant fees and interest income earned on trust accounts of the Plan. All revenues are used to pay the Plan's administrative expenses.
The participant fee is a combination of a $20 annual fee, paid in two $10 semi-annual installments, and an asset based fee calculated based on a percentage of the participant's account balance. The asset-based fee, estimated to be 4.5 basis points annually ($6 per $10,000 of account value), is paid in two 2.25 basis point semi-annual installments. A basis point is equal to one one-hundredth of one percent. The asset-based fee is charged only on accounts with balances in excess of $20,000 and capped for accounts exceeding $200,000. This fee is subject to change. These fees are deducted from participant's accounts in April and October of each year.
Fees will be deducted equally from each of the participant's investment options. Although all participant account assets are included in the calculation of total fees, deductions will not be taken from outstanding loan balances or the Schwab PCRA Self Directed Investment Account.
The administrative cost for participating in the Plan is low when compared to other public employer-sponsored deferred compensation plans throughout the country. The Board has and will continue to control Plan expenses and maximize value to participants. Each of the mutual funds offered by the Plan has a fund operating expense that is deducted directly from the fund's daily price. These fees vary based on the mutual fund selected (see Gross Operating Expenses). For a complete description, please refer to the fund prospectus.Under current industry practices, many mutual fund companies pay reimbursements where the plans are performing administrative functions that mutual fund companies would otherwise have to perform themselves.
Learn more about Payments of Mutual Fund Reimbursements to Participants.
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