Participants should attend a free Retirement Planning Seminar before submitting a distribution form.
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Participants do not need to contact the Plan immediately upon severance of City service if they do not wish to withdraw funds at that time. At the time a participant decides to withdraw funds, he must complete a Distribution Form. A participant can elect:
Should a participant return to City employment and elect to rejoin the NYC DCP, the distribution of his/her account will commence as he/she previously chose, unless he/she elects to change or stop distributions.
When an employee rejoins the 457 Plan or the 401(k) Plan, a second account will be established for his new contributions. He will receive a statement each quarter, which will detail the contribution account and the distribution amount. 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, he/she may transfer his/her account balance to the plan of his/her new employer without the withholding of any taxes. He/she must enroll in the other plan before the transfer can occur.
Participants can attend a free Retirement Seminar at the Plan's administrative office to learn more about their distribution options.
Pre-Tax 457: Upon severance from City employment, 457 Plan participants can receive direct payments in their own name, without penalty, regardless age. Participants can roll over their account to another eligible retirement plan (NYCE IRA, 457, 401(k), 403(b), or a retail IRA). However, subsequent distributions from those plans may become subject to a 10% early withdrawal penalty.
Roth 457: Upon severence from City employment and attainment of age 59 1/2, participants can receive a tax-free distribution (Qualified Distristribution) from their Roth 457 account, provided their initial Roth contribution was more than five years ago. If a Roth distribution is a non-Qualified Distribution, earnings are subject to all applicable taxes, but no 10% penalty. Participants in the Roth 457 can roll over their account to another Roth 457, Roth 401(k), Roth 403(b), or Roth IRA.
Pre-Tax 401(k): Either upon severance from City employment or upon reaching age 59 1/2, participants in the Pre-Tax 401(k) Plan can choose either to receive direct payments in their own name or roll over their account directly to another eligible retirement 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.
Roth 401(k): Upon reaching age 59 1/2, provided their initial Roth contribution was more than five years ago, participants in the Roth 401(k) Plan can receive a tax-free distribution (Qualified Distribution). If a Roth distribution is a non-Qualified Distribution, earnings are subject to all applicable taxes. Participants in the Roth 401(k) can roll over their account to another Roth 401(k), Roth 457, Roth 403(b), and 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. The NYCE IRA has the benefit of the same investment options and, therefore, the same cost structure as the Deferred Compensation Plan.
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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.
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Delay of Required Minimum Distributions (RMD) until February 1, 2013
Due to Hurricane Sandy, participants of the New York City Deferred Compensation Plan and the NYCE IRA are eligible for disaster relief under IRS guidance. As such, participants may delay taking RMDs until February 1, 2013, without triggering the 50% excise tax under Code section 4974. These delayed RMD payments will be reported as taxable income to participants and beneficiaries in the year in which the RMDs are actually paid.
A participant can elect to begin receiving payments at any time by submitting a Distribution Form to the Plan's Administrative Office and may defer distributions up until April 1 of the calendar year following the calendar year in which the participant attains age 70 1/2. Should a participant wish to change or stop distributions, he/she is permitted to do so at any time by submitting a new Distribution Form.
There is no penalty for withdrawing funds from the 457 Plan. However, participants in the 401(k) Plan are subject to a 10% penalty on most withdrawals made prior to age 59 1/2.
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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 Web site, and submit it along with the Distribution Form.
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Learn more about the NYCE IRA
Learn about in-service withdrawals
Learn about Deferred Compensation Plan loans