The Deferred Compensation Plan


Deferred Compensation News

Attention Public Safety Workers - A new strategy may help you save taxes

Thanks to the Pension Protection Act of 2006 (PPA) and the Defending Public Safety Employees’ Retirement Act signed into law in June 2015, effective January 1, 2016, public safety workers age 50 or older who retire or separate from City service are exempt from the 10% early withdrawal tax. This includes distributions from the 401(k) and the 401(a) plans, effective after December 31, 2015 (Defending Public Safety Employees’ Retirement Act of 2015).

Public safety employees include employees who provide:

  • Police Protection
  • Firefighting Services
  • Emergency Medical Services

You can claim the exemption by filing IRS Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, with your Federal tax return.  Consult your tax advisor to determine if you are eligible.

Quick Summary: When does the 10% Penalty Apply

PLAN

Under
Age 50

Age
50-54

Age
55 - 59 1/2

59 1/2
and older

457

No

No

No

No

401(k)

Yes

No (1)

No

No

401(a)

Yes

No

No

No

Traditional NYCE IRA

Yes

Yes

Yes

No

(1) Effective for distributions after 12-31-2015

 

Contribution Limit for 2017

Each year, the Internal Revenue Service sets limits on the amount of wages that can be deferred. These limits are tied to inflation statistics, which are recalculated each fall for the following calendar year. Employees can defer the maximum in both the 457 and the 401(k) plan.

 

457 Plan

2016

2017

Regular Contribution Limit $18,000

$18,000

Age 50 and Over Contribution Limit $24,000

$24,000

DAR (Catch-up) Contribution Limit $18,000

$18,000

 

 

401(k) Plan 2016

2017

Regular Contribution Limit $18,000

$18,000

Age 50 and Over Contribution Limit $24,000

$24,000

 

Learn more about Your Contributions

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