The Deferred Compensation Plan


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Withdrawing Assets

Before withdrawing funds, it’s a good idea to attend a free Retirement Planning Seminar.


Severance from City Service

Participants do not need to withdraw funds upon leaving City service.

At the time a participant decides to withdraw funds, they must complete a Distribution Form.  A participant can elect:

 

1. Direct Payment or Rollover Read More

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Pre-Tax 457: Upon severance from City employment, 457 Plan participants can receive direct payments, without penalty, regardless of age. Funds can be rolled over into other eligible retirement plans (NYCE IRA, 457, 401(k), 403(b), or a retail IRA), but rolled over funds may become subject to a 10% early withdrawal penalty.

Roth 457: Upon severance from City employment, participants age 59 ½ or older whose initial account contribution was five or more years ago can receive a tax-free distribution Qualified Distribution).   Non-Qualified distributions are subject to all applicable taxes, but no 10% penalty. Funds can be rolled over to other Roth 457, Roth 401(k), Roth 403(b), or Roth IRA accounts.

Pre-Tax 401(k): Either upon severance from City employment, or upon reaching age 59 1/2, participants can receive direct payments or roll over their account to another eligible plan (NYCE IRA, to another 457, 401(k), 403(b), or a retail IRA).  Withdrawals taken before age 59 1/2 may be subject to a 10% early withdrawal penalty. Effective December 31, 2015, distributions from pre-tax 401(k) and 401(a) accounts by qualified public safety employees who have reached age 50 will also be exempt from the 10% early withdrawal penalty. Please consult your tax advisor to determine eligibility.

Roth 401(k): Upon reaching age 59 1/2, participants whose initial Roth contribution was more than five years ago can receive tax-free distributions (Qualified Distributions).  Non-Qualified Distribution are subject to all applicable taxes and a 10% early withdrawal penalty.  Funds can be rolled over to another Roth 401(k), Roth 457, Roth 403(b), or Roth IRA. 

 

IMPORTANT:  The Deferred Compensation Plan is a low cost plan compared to retail IRA providers, therefore, participants should compare all fees before making any rollover decisions. If, however, you do choose to rollover, remember that you can always roll your money back to the NYCE IRA. The NYCE IRA has the benefit of the same investment options and, therefore, the same cost structure as the Deferred Compensation Plan.

 

Learn More about rolling funds back into the Plan via the NYCE IRA

2. Method of Payment Read More

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There are four methods of payment participants can choose:


Full Withdrawal: Distribution of the account balance. 

Amount Certain: A portion of the account the participant specifies ($1,000 minimum) either in a dollar amount or a percentage of their account balance. There is a maximum of five (5) requests per year. Requests in excess of the maximum may be subject to a fee.

Periodic Payments: Distributions taken over regular intervals (monthly, quarterly, semi-annually, or annually) totaling either the entire account or a portion of the account as specified by the participant. 

Amount Certain with Periodic Payments: An amount certain followed by distributions made over regular intervals totaling either the entire account or a portion specified by the participant.

 

Periodic payments offer several advantages:

• Savings on taxes: When you take a lump-sum withdrawal, you have to pay all your taxes at once. With periodic payments, your tax liability is spread out over time.

• Retirement Income: One of the primary goals of the Deferred Compensation Plan is to provide a portion of your retirement income. Choosing periodic payments may provide a stream of retirement income for years to come.

• Potential Account Growth: As long as there is money in your account, it will remain tax-favored and has the potential to grow.

 

IMPORTANT: A participant can determine the length of his/her distribution by selecting either (a) the number of payments he/she wants to receive; (b)  the dollar amount of the payments; or (c) elect to have distribution paid out over his/her life expectancy.  However, in no event can a participant's account be distributed over a period of time that is longer than his/her life expectancy.

3. Commencement Date Read More

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Upon severance from City service, or upon reaching age 59 ½ in the 401(k) plan, participants can begin receiving distributions at any time by submitting a Distribution Form to the Plan's Administrative Office. You can change or stop distributions at any time.

Effective December 31, 2015, distributions from pre-tax 401(k) and 401(a) accounts by qualified public safety employees who have reached age 50 will also be exempt from the 10% early withdrawal penalty. Please consult your tax advisor to determine eligibility.

Note: Participants must be severed from City service for at least 45 days before a distribution can be processed.

4. Direct Deposit Read More

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Electronic Fund Transfers (direct deposit) are available for periodic payments at no charge.  A nominal fee will apply for one-time payments.  You must complete an Authorization Agreement for Electronic Fund Transfers (EFT), available in the Forms and Downloads section of this website, and submit it along with the Distribution Form.


If a participant returns to City employee and rejoins the 457 or 401(k) Plan, a second account will be established for their new contributions.  A single fee will be charged for the two accounts.

If the participant goes to work for another governmental employer or tax exempt organization offering a 457 plan, their account balance may be transferred to the new employer’s plan without the withholding of any taxes. Note: the participant must enroll in the other plan before the transfer can occur.

To learn more about your distribution options, attend a free Retirement Seminar at the Plan's administrative office.

 

Rolled Your Money Out of DCP?

Wouldn't it be NYCE to roll your funds back into the Plan?

Learn how

 


Domestic Relations Orders (DROs)

In order for the Plan to separate a Participant’s assets in the event of a divorce, it is necessary for the Plan to receive a certified DRO (a court order that is signed by a judge and certified by the clerk of the court) detailing how the Participant’s assets are to be separated.

View the Plan's Domestic Relations Order Policy

 


Forms and Brochures
Learn more about the NYCE IRA
Learn about in-service withdrawals
Learn about Deferred Compensation Plan loans