Deferral Acceleration for Retirement (Catch-Up Provision)
Deferral Acceleration for Retirement (DAR) is a “catch-up” provision for the 457 Plan. Participants who have not contributed the maximum amount to the 457 Plan in previous years have an opportunity to make up for underutilized contributions prior to retirement through the DAR program.
DAR allows qualifying participants to contribute funds above the annual maximum to the Plan, the total of which cannot exceed twice the applicable annual contribution amount (regular contributions plus DAR contributions) for three consecutive calendar years. Please note that the "age 50 and older" additional contribution amount may not be used during the three years a participant is using the regular 457 catch-up provision. The "age 50 and older" additional contribution cannot be classified as an underutilized contribution for DAR purposes either.
DAR can be elected in the three years before the participant's designated Normal Retirement Age (NRA), which is any age in the range of years beginning when a participant may retire and receive full pension benefits up until age 70 1/2. If a participant is not in a pension system, NRA may be any age between age 65 and 70 1/2.
If a participant did not join the 457 Plan as soon as he/she became eligible to join, or if he/she did not contribute the maximum amount each year, he/she has underutilized contributions. Uniformed and Managerial employees are eligible to "catch-up" for underutilized contributions dating as far back as 1986, as long as they were employed with the City for the years for which they wish to catch up. Similarly, civilian employees are eligible to "catch-up" on underutilized contributions dating as far back as 1987.
Participants may contact the Plan's Administrative Office at (212) 306-7760 and requestan analysis of his/her past contributions, should the participant have any question about whether he/she has underutilized contributions.
DAR cannot be used more than once. Participants who qualify for DAR are allowed a one-time use of the provision that will enable them to "catch up" on past-underutilized contributions over three consecutive years.
Unlike regular 457 Plan contributions, which are a percentage of weekly or bi-weekly gross compensation, DAR contributions are a fixed dollar amount per check. So, for example, if he/she wants to contribute $7,500 through DAR in 10 paychecks, he/she can do so by submitting a request to contribute exactly $750 per check for 10 consecutive paychecks. A participant's per-check DAR deduction amount must not exceed the adjusted gross income, otherwise no DAR deduction will occur.
A participant may choose to begin DAR deductions at any point during a calendar year. However, partial participation (starting mid-year) is counted as one full calendar year. For example: If DAR deductions begin in June, DAR can be used for seven months (June through December) in that calendar year. These seven months will be counted as the first year of the three consecutive calendar years of DAR.
DAR deferrals, which are invested in the same manner as the account’s investment allocation, may be changed or stopped by the participant at any time. Changes to a DAR deferral amount will take affect approximately 30 days from the date a DAR form is submitted to the Plan.
Although DAR is based on underutilized contributions from previous Plan years, current participation in DAR will only affect taxes in the year DAR is used andprevious years’ W-2s will NOT be retroactively adjusted to reflect current DAR contributions.
How does a participant begin making DAR deferrals?
A participant must complete a DAR form which can be printed from our Web site. The form must be submitted to the Plan's Administrative Office at 40 Rector Street, 3rd Floor, New York, New York 10006. Office hours are 9:00 a.m. to 5:00 p.m., Monday through Friday.
View the 457/401(k) Plan Differences (PDF)
How to Enroll in the Plan
See how DCP contributions will affect your net pay (downloadable software)
Other Ways of Contributing to the Plan
DCP as an alternative to FICA