What Is NYC Deferred Comp?
NYC Deferred Comp is a retirement savings program available to eligible New York City employees. It allows participants to defer a portion of their salary into tax-deferred accounts such as the 457(b) and 401(k) plans. Contributions lower current taxable income and grow tax-free until withdrawn during retirement. For 2024, the contribution limits have increased to $23,000, with an additional $7,500 allowed for employees aged 50 or older, based on IRS guidelines.
Key Benefits of NYC Deferred Comp
- Tax Savings: Contributions reduce taxable income.
- Flexible Investment Options: Choose from a range of investment plans.
- Catch-Up Contributions: For employees over 50, higher contribution limits apply.
- Roth Option: Some plans offer a Roth contribution option, allowing for tax-free growth and withdrawals.
How to Enroll in NYC Deferred Comp
To enroll in NYC Deferred Comp, employees can:
- Select between the 457(b) or 401(k) plan.
- Choose pre-tax or Roth contributions.
- Decide on contribution amounts and investment options.
- Contact their employer or NYC DCP for enrollment information.
Comparison of 457(b) vs. 401(k) Plans
|
Feature |
457(b) Plan |
401(k) Plan |
|
Eligibility |
Government employees and certain non-profits |
Most private sector employees |
|
Contribution Limit (2024) |
$22,500 (under 50), $30,000 (over 50) |
$22,500 (under 50), $30,000 (over 50) |
|
Early Withdrawal Penalty |
No penalty for early withdrawals |
Penalty if withdrawn before 59½ |
|
Roth Option |
Not commonly offered |
Available in some cases |
|
Tax Benefits |
Contributions reduce current taxable income |
Contributions reduce current taxable income, Roth offers tax-free withdrawals |
Frequently Asked Questions
1. What is the contribution limit for NYC Deferred Comp in 2024?
The contribution limit is $22,500 for participants under 50. For those over 50, the limit is $30,000 due to catch-up contributions.
2. Can I withdraw my funds before retirement?
Withdrawals are generally allowed without penalty after reaching the age of 59½, but early withdrawals may be subject to taxes and penalties.
3. What’s the difference between the 457(b) and 401(k) plans?
The 457(b) plan is for government employees and has no early withdrawal penalty, while the 401(k) is more widely available but may have early withdrawal penalties before 59½.
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