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.

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.

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.

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.

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.

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.

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.

The Plan:

• 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 $20,500 in 2022). Your right to use the Plan is not limited by any income level that may be imposed for IRAs.
• If separated from service, does not incur a 10% tax penalty for distributions taken before age 59½.

Similarities and differences are captured in this chart.

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.

Yes. The Plan offers you an opportunity to defer benefit payments until as late as age 72 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.

No, your Social Security taxes and pension benefits, if any, will be calculated on the basis of your gross wages.

Enrolling in the Plan is one of the most important decisions you can make while working for New York State or a participating employer.

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.

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.

The New York State Deferred Compensation Plan (Plan) is dedicated to transparency in fees and the cost of participation in the Plan. The Plan is funded almost entirely by participant paid fees and does not receive any funding from New York State.

Fees that participants pay currently come from three components:

1. An administrative fee of $20 per year is deducted from every participant's account, broken into two installments - half in April and half in October.
   
   
2. An asset-based fee is levied only on accounts over $20,000 and assessed only on amounts up to $200,000. This asset-based fee is calculated as a percentage of the portfolio and can change based on total Plan expenses and assets. The current rate is 3 basis points, or 3 hundredths of one percent (.03%). Like the administrative fee this is applied half in April, and half in October. For example - an account that contains $300,000 would pay an annual administrative fee of $60 ($200,000 x .03%)
   
   
3. The investment management fees are the cost of each individual investment option that you select within your Plan account. This fee is not a visible deduction directly from a Plan investment but rather is charged by the investment managers against the performance of the investment product. These fees are expressed as a percentage and can be seen on the quarterly Investment Performance Report as "expense ratio". The Plan regularly takes advantage of opportunities to lower these fees when possible, including conversions to lower cost shares.

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.) until you have reached the annual maximum contribution limit established by the IRS.

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.

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.

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 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.

When you become a participant in the Plan, you select how you want your contributions to be invested. The Plan provides numerous investment options.

Yes. You may allocate your contributions in any whole percentage among the Plan investment options.

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.

Excessive trading (also known as frequent trading or market timing) is the practice of buying and selling investments frequently in an attempt to capitalize on short-term movements or pricing disparities in the market. This practice increases fund expenses, which results in higher fees and adversely affects fund performance for all shareholders invested in the fund.

Excessive Trading Policy

Designed to protect participants from the potential negative impacts of market timing, our excessive trading policy imposes a 6/11/20 rule.

If a participant makes six or more trades over one calendar quarter, they will receive a warning letter. If a participant makes 11 trades over two consecutive quarters, the participant must send their exchange requests through the U.S. mail for the remainder of that year. If a participant reaches 20 trades in one calendar year, all future trade requests must be submitted through the U.S. mail for the remainder of that year.

Trading that is deemed excessive may also result in suspension of buy exchange privileges at the request of the mutual fund or by subjective review of the Administrative Service Agency.

International Equity Funds and Emerging Markets Fund Restrictions

A 60-day re-purchase restriction is applicable to both of the Plan’s developed-market International Equity Funds. Participants are permitted to exchange assets from either of the International Equity options, but are not able to re-purchase shares in these funds during the following 60 calendar-days. Direct transfers are not permitted between the International Equity Fund – Active Portfolio and the International Equity Fund – Index Portfolio and an exchange out of either of these fund options will prohibit an exchange into either fund for a 60-day period. The 60-day re-purchase restriction also applies to the Morgan Stanley Emerging Markets Portfolio. Participants are permitted to exchange assets out of the Morgan Stanley Emerging Markets Fund, but are not able to re-purchase shares in this fund during the following 60 calendar-days. Please also refer to the redemption fee information below.

Mutual Fund Redemption Fees

A number of mutual fund companies impose mandatory, fund-specific redemption fees. Plan participants should be aware that the Plan is required to administer redemption fees on behalf of the mutual funds that impose them. A redemption fee is assessed when shares in a mutual fund are bought and sold within a specific timeframe. The Trading Restrictions and Redemption Fees Brochure lists the investment option(s) that currently impose redemption fees. The investment options that impose a redemption fee, the amount of the fee, and the minimum holding period can change at any time.

Many mutual fund companies pay reimbursements to the Plan for administrative functions they would normally perform themselves. Learn more about mutual fund reimbursements.

Get the help you need

If you need more help, call the HELPLINE to speak to your Account Executives.

The Plan restricts certain exchanges between investment options.

A number of mutual fund companies pay reimbursements to the Plan for performing administrative functions they would normally perform themselves.

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.

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.

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.

If you return to work for the same State agency or another State agency, you can either:

1. Declare yourself as separated from service which would allow you to receive distributions from your Plan account; or
2. Resume payroll contributions to your Plan account thereby forfeiting your right to take distributions until you separate service again.

Yes. Participants who are eligible for a distribution may rollover all or a portion of those assets to an IRA.

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.

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 59½
• Required Minimum Distribution – when you turn age 72, the IRS requires you take a distribution, unless you are still employed by the same employer
• Death
• Small Inactive Account provision
• Purchase service credit in a qualifying pension plan
• Absence due to qualifying military service

See also our Benefit Payment Options overview.

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.

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. You may also log into your account to request a distribution online.

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 72, however, the IRS requires that you take a Required Minimum Distribution (RMD) annually. This requirement was waived for 2019. 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 72, 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.

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 72. It is called your Required Minimum Distribution (RMD). This requirement was waived for 2019. Of course, you may begin receiving payments sooner, if you wish, as long as you have permanently terminated employment.

If you remain employed with New York State or a participating employer when you are 59½, 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 you remain employed with New York State or a participating employer you are not required to receive a minimum distribution even when you reach 72. The RMD requirement does not take effect until you leave service with New York State or a participating employer.

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.

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.

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.

No. Only pre-selected periodic distributions are eligible for the income tax deduction. Lump sum and non-periodic payments are not eligible.

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 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.