Tag Archives: members

Divorce and Your Pension—Part 1

In New York State, pensions and retirement benefits earned during the marriage may be marital property and can be divided when a marriage ends. Divorce can affect your pension and other retirement benefits in the following ways:

Your ex-spouse may be entitled to a portion of your pension.
You may be required to name your ex-spouse as the beneficiary of any death benefit.
You may be required to choose a pension payment option that provides a continuing benefit to your ex-spouse when you die.
Your ex-spouse may be entitled to a portion of your cost-of-living adjustment (COLA).

How Your Pension Can Be Divided in a Divorce

The most common method for dividing pension benefits is known as the Majauskas Formula, which gets its name from a case decided by the State Court of Appeals. This formula gives your ex-spouse one-half of the portion of your pension earned during the marriage.

How the Majauskas Formula Works

Dividing Your Pension in a Divorce - the Majauskas Formula

Example of the Majauskas Formula

Other Ways to Divide Pension Benefits

The Majauskas formula is not the only way to divide pension benefits. Other ways include using:

A hypothetical retirement benefit. NYSLRS can calculate a hypothetical pension using your final average earnings and service credit as of a specific date and then determine the ex-spouse’s share based on the terms of the divorce.
A flat percentage. Your ex-spouse can receive a percentage of your pension other than the percentage derived from the Majauskas formula.
A flat dollar amount. This option is commonly used if you retired and already receive monthly pension payments.

Formalizing the Division of Your Pension After a Divorce

Once you finalize the terms of your divorce, a judge issues a final judgment of divorce. If your ex-spouse will receive a share of your pension and other retirement benefits, a Domestic Relations Order (DRO) is needed. A DRO is a court order specifying how benefits should be divided.

NYSLRS must have an approved DRO on file to make pension payments to an ex-spouse—we cannot pay an ex-spouse based solely on a judgment of divorce or settlement agreement. It’s important to complete and file the DRO with NYSLRS well before the your retirement date to avoid changes or delays in payments. Questions about the consequences of not filing a DRO on time should be addressed to an attorney.

If your ex-spouse is not awarded a portion of your pension benefits, NYSLRS does not need a DRO.

Drafting and Filing a DRO

Draft a DRO. NYSLRS offers an online DRO template, which was developed with guidance from NYSLRS’ legal counsel. It generates a customized DRO based on the information entered about the terms of the divorce. While its use is not required, DROs prepared using the NYSLRS template receive priority review.

Get Your DRO Approved. A Supreme Court judge must sign the DRO and enter it as an official court document.

Submit Your DRO to NYSLRS. NYSLRS requires a certified copy of the signed DRO as well as proof of divorce, such as a copy of the judgment of divorce. NYSLRS legal staff will review the DRO and determine whether it complies with New York State Retirement and Social Security Law and applicable policies and procedures.

All Parties Notified. NYSLRS will send a letter to all parties notifying them whether the DRO has been accepted or rejected. If the DRO is rejected, the letter will explain why. The DRO must be amended, approved and resubmitted to NYSLRS.

For More Information

For more information about how your pension may be affected and for additional guidance on DROs, visit our Divorce and Your Benefits webpage. Also, read our blog post about how divorce may affect your other NYSLRS benefits.

Retirement Myths—Part 2

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Sometimes a small misunderstanding can have a big impact on your retirement benefits. Here are the facts you should know behind five more retirement myths.

Retirement Myths vs Facts

I don’t need to update my contact information with NYSLRS because my employer already has it.

Your employer does not provide updated member contact information to NYSLRS. You must update your contact information with both your employer and NYSLRS. Retirement Online is the fastest way to review the mailing address, phone number and email we have on file for you and update them, if needed.

I have to wait until I’m close to retirement to estimate my pension benefit.

Understanding your pension and finding out how much you can expect to receive is an important part of retirement planning. Even if you are years away from retiring, you can estimate your pension in minutes using Retirement Online. You can enter the percentage your earnings will increase each year and additional service credit if you plan to purchase service credit for a previous membership, prior employment or military service.

Note: Some members may not be able to estimate their pension using Retirement Online—for example, members who recently transferred to NYSLRS and some Police and Fire Retirement System (PFRS) members. If you receive a notification that the system cannot generate your estimate, you can request an estimate using our secure contact form (select Estimates from the Topic dropdown).

If I retire with an outstanding loan, my pension payment will be reduced but only until the loan is paid off.

If you retire with an outstanding loan, your pension will be permanently reduced. We do not apply the amount of the reduction toward the outstanding balance. Also, all or part of your outstanding loan balance may be subject to federal income tax. If you retire before age 59½, the IRS may charge an additional 10 percent penalty.

Note: Employees’ Retirement System (ERS) members can repay their NYSLRS loan after they retire. However, you need to pay the full balance of the loan in a one-time lump sum payment. Your pension would then be recalculated to increase your monthly payment going forward, but it would not be retroactive to your date of retirement.

I have to complete a bunch of paper forms and get them notarized to file for retirement and begin receiving my pension.

You can apply for retirement in Retirement Online. It’s faster and more convenient than printing and mailing forms, and there’s nothing to have notarized. And, when you apply online, you can also make changes up to your date of retirement—for example, if you need to change your banking or tax information. Watch our video for more information.

I can change my pension beneficiary after I retire.

That depends. If you choose the Single Life Allowance option, monthly pension payments will stop upon your death and there will be no continuing payments to a beneficiary, even if you die soon after retiring. If you choose a pension payment option that provides a lifetime benefit for a single beneficiary, you cannot change your beneficiary even if they die before you do. However, if you choose a pension payment option that provides a limited benefit (for a certain period of time after retirement), you can change your beneficiary after you retire.

Note: Most retirement plans also provide a post-retirement death benefit, which is a one-time lump sum payment to your beneficiaries. You can change your beneficiaries for this benefit any time.

Use Retirement Online

Retirement Online is the fastest and most convenient way to access your retirement account information and conduct business with NYSLRS. If you don’t have an account or for help signing in to an existing account, check out our Retirement Online tools and tips for step-by-step instructions to register, reset your password, unlock your account and more.

For More Information

Check out Retirement Myths—Part 1 where we debunk five other retirement myths. You can also find answers to the most common questions we receive from members and retirees on our Contact NYSLRS page.

Retirement Myths—Part 1

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The laws governing your NYSLRS retirement benefits can be confusing. Sometimes a small misunderstanding can have a big impact. So, let’s get prepared to make decisions based on facts, not common retirement myths.

Retirement Myths vs Facts

My NYSLRS pension is like a 401(k)-style retirement savings account, and I will get my contributions back when I retire.

Your NYSLRS pension is a defined benefit plan, also known as a traditional pension plan. When you retire, you will receive a monthly pension payment for the rest of your life. Your pension will be calculated using a preset formula based on your earnings and years of service—it will not be based on the individual contributions you paid into the system.

If I work for more than one NYSLRS participating employer at the same time, the service credit from both jobs will count toward my pension benefit.

You can only earn one year of service credit in a 12-month period. If you work part-time for two participating employers, you would receive service credit from both, up to the maximum of one year. However, if you work full-time for one NYSLRS employer and part-time for another, you would only receive one year of service credit.

For full-time employees of a school district, you receive one year of service credit per school year, even if you only work 10 months of the year. So, you won’t receive additional service credit for working over the summer.

NYSLRS administers health insurance coverage for its retirees.

NYSLRS does not administer health insurance programs. We may deduct premiums from a retiree’s monthly pension benefit to pay for health insurance coverage if their former employer instructs us to do so, but we can’t answer questions about coverage or changes in premium amounts.

If you are planning to retire soon, your employer’s human resources or personnel office should be able to answer your questions about post-retirement health insurance coverage. If you retired from a New York State agency, the New York State Department of Civil Service administers the New York State Health Insurance Program (NYSHIP). If you retired from a county, city, town, village or school district, contact your former employer.

I can take out a NYSLRS loan after I retire.

To be eligible for a NYSLRS loan, you must be a NYSLRS member and actively working for a NYSLRS participating employer. Once you retire, you cannot take out a NYSLRS loan.

NYSLRS will automatically start paying my pension as soon as I’m eligible.

Your pension is not automatic. To begin collecting your pension, you must meet the minimum age or service requirements established by your retirement plan and apply for retirement 15 to 90 days before your chosen date of retirement.

Use Retirement Online

For More Information

Check out Retirement Myths—Part 2 where we debunk five other retirement myths. You can also find answers to the most common questions we receive from members and retirees on our Contact NYSLRS page.

10 Things Members Should Know

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NYSLRS is one of the largest retirement systems in the world, administering benefits for more than 1.2 million members, retirees and beneficiaries. Take a look inside NYSLRS and brush up on your NYSLRS knowledge—here are 10 things members should know.

Retired? Check out 10 Things Retirees Should Know.

1. Retirement Online is the Fastest, Most Convenient Way to Do Business With NYSLRS

Retirement Online is the fastest way to manage your NYSLRS account. Skip printing forms, having them notarized and sending them through the mail. When you submit your requests through Retirement Online, NYSLRS has them immediately, and your changes will be completed more quickly. It’s convenient and secure. Check out what members can do in Retirement Online.

If you don’t have an account or for help signing in to an existing account, check out our Retirement Online tools and tips for step-by-step instructions to register, reset your password, unlock your account and more.

2. Your Pension is a Lifetime Benefit—And Your Pension Benefits are Secure

NYSLRS pensions are defined benefit plans, also known as traditional pension plans. When you retire, you will receive a monthly pension payment for the rest of your life. Your pension will be calculated using a preset formula based on your earnings and years of service—it will not be based on the individual contributions you paid into the system. Member contributions support the benefits earned by current and future retirees and are an important asset of the Common Retirement Fund, which holds and invests the money used to pay NYSLRS benefits. The Fund is widely recognized as one of the best-funded and best-managed public pension plans in the nation. Comptroller Thomas P. DiNapoli is administrator of NYSLRS and trustee of the Common Retirement Fund.

3. ‘Go Green’ and Get Your Important Documents Sooner

You can help us ‘go green’ and reduce paper waste by choosing email as your delivery preference for correspondence and other important documents, such as your Member Annual Statement. When you have something to view, we’ll send an email notifying you to sign in to Retirement Online. And it will save time—you’ll get access to your important documents sooner than printed copies are mailed. Learn how to get email notifications for important documents.

4. Your Tier Determines Your Benefits

Your tier, which is based on your date of membership, determines your benefits, such as eligibility for death benefits or taking a NYSLRS loan and the formula used in the calculation of your benefits.

5. Vested Means You Qualify for a Retirement Benefit

Becoming vested is a crucial milestone for NYSLRS members. It means you have earned enough service to qualify for a retirement benefit once you meet the minimum age or service requirements established by your retirement plan. All members who have at least five years of service credit are vested.

6. Review Your Beneficiaries Periodically

NYSLRS retirement plans provide death benefits for beneficiaries of eligible members who die before retiring. It’s a good idea to review your beneficiaries from time to time to make sure they reflect your current wishes. The beneficiary you named before might not be the one you would choose today. You should also review the contact information for your named beneficiaries so we can find them when needed.

7. Request Additional Service Credit as Early in Your Career as Possible

Service credit is a major factor in calculating your pension benefit. You earn a year of service credit for each year of full-time employment with a participating employer. You may also be able to request additional credit if you worked for your current or another public employer before joining NYSLRS or if you served in the U.S. Armed Forces and received an honorable discharge from active military duty. You must submit your request before retirement, and you should do it as early in your career as possible.

8. Estimate Your Pension

Finding out how much you can expect to receive is an important part of retirement planning. Most members can estimate their pension using Retirement Online in just a few quick and easy steps. Retirement Online uses your current earnings and service information to calculate your estimate, including your final average earnings (FAE) and the amounts for the pension payment options available to you. You can fine-tune your estimate or see how different choices would affect your benefit by entering different retirement dates or a beneficiary’s date of birth.

9. Supplement Your Pension with Retirement Savings

Think of retirement security as a three-legged stool. Each leg is a source of income to help support you when your working days are done. It’s important to understand all your potential sources of income to effectively plan for the future and boost your retirement confidence. Your pension can provide a significant part of your retirement income, but it’s a good idea to supplement your pension with retirement savings and start saving early so your money has time to grow.

10. Your Retirement Plan Publication is an Essential Resource

Your retirement plan publication is an essential resource that explains your NYSLRS benefits in detail—how long you’ll need to work to receive a pension, how your benefit is determined, what death and disability retirement benefits may be available, and more. You should consult it throughout your career, but it’s especially important to read as you prepare for retirement.

Public Service Recognition Week

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This Public Service Recognition Week, we proudly celebrate more than 713,000 members and 522,000 retirees of the New York State and Local Retirement System (NYSLRS) for their service to the people of New York State.

Origin of Public Service Recognition Week

This week was created in 1985 to honor those who serve our nation as federal, state, county, local and tribal government employees. Congress officially designated the first full week of May as Public Service Recognition Week. This year, it is being celebrated May 4 through 10.

NYSLRS Members Deliver Critical Services

Whether they are protecting public health and safety, driving our children to school or clearing snow from the roads, NYSLRS members deliver essential services New Yorkers depend on, and you can find NYSLRS members at all levels of government such as:

New York State;
Counties, cities, towns and villages;
School districts;
Correctional facilities;
Public libraries; and
Fire and water districts.

Many members and retirees also give back to our State by volunteering in their communities or supporting charitable causes. That’s in addition to the other important ways retirees contribute to New York State’s economy.

Comptroller DiNapoli’s Faith in Public Service

New York State Comptroller Thomas P. DiNapoli is the administrator of NYSLRS and trustee of the Common Retirement Fund. He began his own public service career at the age of 18, when he won his first election to become a trustee on the Mineola Board of Education. This made him the youngest person in New York State history elected to public office. He is also the second longest-serving Comptroller in New York State history.

Comptroller DiNapoli often speaks about the contributions New York’s public employees make to their communities and their State. He encourages young people to consider a career in public service. “It’s more than a job,” he says. “It’s a career with purpose.”

Compounding: Use Time to Grow Your Money More

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Financial security doesn’t just happen; it takes planning and time. You know you can count on your NYSLRS pension in retirement. But, if you want to improve your chances of a financially secure retirement, your plan should include retirement savings. It’s important to start saving early so your money has time to grow.

When you invest your savings in an individual retirement account (IRA) or a 401(k)-style retirement savings plan, you earn a return on your investment, and those returns are compounded. That means your money increases in value by earning returns on both the original amount and your accumulated profits. This is different than earning simple interest. Let’s see how they both work.

How Simple Interest Works

In banking, simple interest is a certain percentage you are paid on the money you put into your account. With simple interest, the amount of interest you earn is based on the original (or principal) amount of the deposit.

Let’s say you open a certificate of deposit (CD), which pays 5 percent simple interest if you agree to keep your money in the CD for a year. If you deposit $1,000 in January, you’ll have $1,050 at the end of the year. That’s $50 more than you started with, so you might decide to keep your money there for another year. With simple interest, the interest you earn the second year and every year after would still be based on the principal amount of $1,000—no compounding.

How Compounding Works

With compounding, your initial investment is reinvested along with your earnings. If you earn the same 5 percent, with compounding, it’s applied to the full balance of your account. So, you would still have that $1,050 at the end of the first year, but by the end of the second year you’d have $1,102.50 in your account instead of $1,100.

In this example, that’s just a difference of $2.50, but, over time, compounding can mean a difference of hundreds or thousands of dollars.

If you’re already building retirement savings, think about giving your savings a boost. If you haven’t started saving yet, right now is the best time to start. The New York State Deferred Compensation Plan (NYSDCP) is available to New York State employees and some municipal employees. Once you’ve signed up, your retirement savings—which may be tax-deferred depending on the plan you choose—will be automatically deducted from your paycheck. Remember, the sooner you start saving, the more time your money has to grow.

Estimate Your Pension in Retirement Online

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Most NYSLRS members can create their own pension estimates in minutes using Retirement Online. Your estimate will be based on the most up-to-date account information we have on file for you. You can enter different retirement dates and beneficiaries to see how those choices would affect your benefit. When you’re done, print your pension estimate or save it for future reference.

Estimate Your Pension in Retirement Online

How to Create a Pension Estimate

To get started:

Sign in to Retirement Online.
Look under My Account Summary.
Click Estimate My Pension Benefit button.
Enter Retirement Date or Your Age at Retirement.

You can fine tune your estimate with:

Your annual earnings and expected pay increases;
Additional service credit (learn about requesting additional service credit); or
The birthdate for a beneficiary.

If you enter your beneficiary’s birthdate, you’ll see the estimated monthly amounts for the pension payment options that provide a lifetime benefit for a single beneficiary and the pension payment options that provide a limited benefit for multiple beneficiaries.

Remember, the amounts are estimates, not a guarantee of what you’ll receive when you retire.

Most Tier 2 through 6 members (more than 90 percent of all NYSLRS members) can use the Retirement Online pension calculator. However, some members may not be able to—for example, members who recently transferred to NYSLRS and some PFRS members. The system will let you know if your estimate cannot be completed. In that case, please send us a message using our secure contact form (select Estimates from the Topic dropdown).

Do More With Retirement Online

In Retirement Online, you can view your account details—date of membership, tier, retirement plan, estimated total service credit and more. Check out what else members can do in Retirement Online.

If you don’t have an account, learn more about Retirement Online and click Register Now. If you need help with Retirement Online, read our Retirement Online Tools and Tips blog post.

Your Death Benefit Beneficiaries

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NYSLRS retirement plans provide death benefits for beneficiaries of eligible members who die before retiring.

It’s important to name beneficiaries and review them periodically. Life circumstances change and a beneficiary you named before might not be one you would choose today. For instance, you may have a new partner or you may have children now. And NYSLRS can only pay a death benefit to the beneficiaries you’ve named.

If you are retired or planning to retire soon, read our blog post, Can You Change Your Beneficiary After You Retire?

2 Types of Beneficiaries

Your primary beneficiary will receive your death benefit. You can list more than one primary beneficiary. If you do, they will share the benefit equally. Or, you can choose different percentages for each beneficiary, which must total 100 percent. (Example: John Doe, 50 percent; Jane Doe, 25 percent; and Mary Doe, 25 percent.)
A contingent beneficiary will only receive a benefit if all your primary beneficiaries die before you do. If you list multiple contingent beneficiaries, they will share the benefit equally unless you choose different percentages.

Special Beneficiary Designations

Your beneficiary doesn’t have to be a person. You can name your estate, a trust or a charity as your beneficiary.

Special Designations for Your NYSLRS Death Benefit Beneficiaries

Estate. When you die, your estate is the money and property you owned. Your death benefit will be given to the executor of your estate to be distributed according to the terms of your will. You can name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as the primary beneficiary, do not name a contingent beneficiary.
Trust. You can name a trust as a primary or contingent beneficiary if you have a trust agreement or provided for a trust in your will. The trust itself would be your beneficiary, not the individuals for whom you established the trust. (Speak with your attorney if you’re thinking about making your trust a beneficiary.)
Entity. You can also name any charitable, civic, religious, educational or health-related organization as a beneficiary.
Minor children. If your beneficiary is under the age of 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may instead choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Custodians can be designated in Retirement Online, or you can contact us for more information and the appropriate form before making this type of designation.

For more information, read our publication, Life Changes: Why Should I Designate a Beneficiary?

Keep Your Beneficiaries Up to Date with Retirement Online

You can change your beneficiaries at any time. In addition to adding or removing them to reflect your current wishes, you should review the contact information for your named beneficiaries so we can find them when needed.

The fastest way to view or update your beneficiaries is in Retirement Online.

Sign in to Retirement Online.
Look under My Account Summary.
Click View and Update My Beneficiaries button.

What Members Can Do in Retirement Online

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When it comes to managing your NYSLRS account, Retirement Online is the fastest way to do it. Skip printing forms, having them notarized and sending them through the mail. When you submit your requests online, NYSLRS has them immediately, and your changes will be completed more quickly. It’s convenient, and it’s secure.

What Members Can Do in Retirement Online

View Your Account Information

On your Account Homepage, you can find your:

Date of membership;
Tier;
Retirement plan (use the benefit plan code to find your retirement plan publication—for more information, check out our video); and
Estimated total service credit.

Get Email Notifications for Important Documents and Help Us ‘Go Green’

You can help us ‘go green’ and reduce paper waste by choosing email as your delivery preference for correspondence and other important documents. When you have something to view, we’ll send an email notifying you to sign in to Retirement Online. And it’ll save time—you’ll get access to your important documents sooner than printed copies are mailed.

To update your delivery preferences:

Look under My Profile Information.
Click update next to ‘Contact by’ or ‘Member Annual Statement by.’
Choose Email from dropdown.

Be sure the email address listed in your profile is current.

If you choose email as your delivery preference, you will not receive a printed copy in the mail.

Update Your Contact Information

It’s important we have your current contact information so you receive the news, correspondence and statements we send you.

To update your contact information:

Look under My Profile Information.
Click update next to email address, mailing address or phone number.

If you don’t already have an email address on file, please provide it so we can contact you quickly with important information, such as a change to your benefits. Use a personal email address you will have access to before and after you retire, not a work email address.

Manage Your Beneficiaries

To add or remove beneficiaries or update their contact information:

Look under My Account Summary.
Click View and Update My Beneficiaries button.

Estimate Your Pension

How much will your pension be? It’s an important question as you plan for retirement. In just a few steps, most members can use Retirement Online to estimate their pension based on the most up-to-date account information we have on file, then save or print the estimate. You can enter different retirement dates and beneficiaries to see how those choices would affect your benefit and help you choose the retirement date that’s right for you.

Look under My Account Summary.
Click Estimate My Pension Benefit button.

Apply for a Loan and Manage Loan Payments

The fastest way to apply for a loan is in Retirement Online. You can see how much you are eligible to borrow, what the repayment amount would be and whether your loan will be taxable—all before you apply.

Look under My Account Summary.
Click Apply for a Loan button.

If you have an existing loan, you can check your current loan balance and adjust your payment amount or make an additional one-time payment.

Look under My Account Summary.
Click Manage My Loans button.

Request Additional Service Credit

You may be able to request additional service credit if you worked for your current or another public employer before joining NYSLRS or if you served in the U.S. Armed Forces and received an honorable discharge from active military duty. In most cases, you have to pay for additional service credit. But because service credit is a factor in the calculation of your retirement benefits, purchasing additional service credit will usually increase your pension. You must submit your request before retirement, and you should do it as early in your career as possible—the sooner you purchase your credit, the less it will generally cost.

To submit your request online:

Look under My Account Summary.
Click Manage My Service Credit Purchases button.
Click Request Additional Service Credit link.

Get Your Member Annual Statement

Your Member Annual Statement is a valuable snapshot of your NYSLRS membership and benefits as of March 31, the end of the state fiscal year. You can access Statements dating back to 2020 online.

Look under My Account Summary.
Click View My Member Annual Statement button.

Statements are made available online each year in early May, sooner than printed copies are mailed—update your delivery preference to get notified.

Generate a Mortgage Verification Letter

If you are applying for a mortgage and need a summary of your NYSLRS account information, you can quickly generate a mortgage verification letter online. The document will show your contribution balance, the date and amount of your last loan, and if you have an existing loan, the current balance, the payroll deduction amount and the interest rate.

Look under I want to… (located at the top right).
Click Generate Mortgage Verification Letter link.

Apply for Retirement

When you are ready to retire, avoid the hassle of paper forms and apply online. You’ll be able to see an estimate of your pension, select your payment option, enter federal tax withholding information, sign up for direct deposit, submit required documents and much more. Learn more about the advantages and how to apply for retirement in Retirement Online.

Other Online Transactions

If you were a member of another New York State public retirement system before joining NYSLRS, you may be able to reinstate your date of membership and tier.

Look under My Account Summary.
Click Reinstate a Previous Membership button.

If you leave public employment with less than ten years of service credit, you can withdraw your membership online and request a refund of your contributions. However, this will end your NYSLRS membership. Before you submit a withdrawal application, we recommend speaking with a customer service representative by sending a message using our secure contact form.

Retirement Online After You Retire

Retirement Online will continue to be an essential tool throughout your retirement years. To learn more, check out how Retirement Online for Retirees Keeps Getting Better.

Deferred Compensation: Another Source of Retirement Income

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Many financial experts cite a common rule of thumb when discussing income in retirement. They say you need 70 to 80 percent of your pre-retirement income to maintain your standard of living once you retire. This is meant to account for the range of expenses you’ll no longer have in retirement, such as payroll taxes, commuting costs or saving for retirement. As a NYSLRS member, your plan for income in retirement likely includes your NYSLRS pension and Social Security benefits. However, for greater financial stability and flexibility, you may want to supplement with retirement savings. For example, you might start investing in a savings plan like the New York State Deferred Compensation Plan (NYSDCP).

Deferred Compensation: Another Source of Retirement Income

What is Deferred Compensation?

Deferred compensation plans are voluntary retirement savings plans like 401(k) or 403(b) plans—but designed and managed with public employees in mind. NYSDCP is the 457(b) plan created for New York State employees and employees of other participating public employers in New York.

Once you sign up for NYSDCP, you can build your own investment portfolio or invest in established investment funds. Your contributions can be automatically deducted from your paycheck, and you can contribute as little as 1 percent of your earnings.

Just like with other retirement savings plans, you have options for how you make your NYSDCP contributions. You might choose a tax-deferred account where you make contributions with pre-tax money. With this option, you won’t pay State or federal taxes on the earnings you contribute until you start making withdrawals. Your employer may also offer the option for a Roth account where you make contributions with after-tax money. With this option, you do pay taxes now, but you won’t pay taxes on the withdrawals you make in retirement. Learn more about how traditional retirement savings and Roth accounts compare.

If your employer is not an NYSDCP participating employer, check with your human resources or personnel office about other retirement savings options.

What Does Deferred Compensation Mean for Me?

Deferring income from your take-home pay may mean less money to spend in the short-term, but you’re planning ahead for your financial future.

You can enroll in a deferred compensation plan anytime—whether you’re close to retirement or you just started working. Usually, the sooner you start saving, the better prepared you’ll be for retirement.