
The NYC Deferred Comp 457 Plan offers a range of retirement savings options to help you build a secure financial future.
You can choose from a variety of investment options, including a fixed interest option that earns a guaranteed rate of return.
The plan allows you to contribute up to $19,500 per year, plus an additional $6,500 if you're 50 or older.
This means you can potentially save a significant amount of money over time, which can add up to a substantial nest egg in retirement.
Key Features
The NYC Deferred Comp 457 plan offers a range of key features that make it an attractive option for eligible city employees.
One of the most notable features is the ability to contribute pre-tax dollars to the plan, which can help reduce your taxable income.
You can contribute up to $19,500 per year, plus an additional $6,500 if you're 50 or older, to the plan.
This means you can save even more for retirement while also reducing your tax liability.
The plan also offers a range of investment options, including a mix of stocks, bonds, and mutual funds.
You can choose from a variety of investment portfolios, each with its own unique mix of assets.
The plan's investment options are designed to be low-cost and easy to understand, making it simple to get started.
You can even take a look at the plan's investment options and performance history online.
The NYC Deferred Comp 457 plan also offers loan provisions, which allow you to borrow up to 50% of your account balance, up to a maximum of $13,000.
If you take a loan, you'll need to repay it within five years, with interest.
This feature can be a lifesaver if you need access to cash for an emergency or other unexpected expense.
You can even take a loan from yourself, using your own retirement savings as collateral.
The plan's loan provisions are designed to be flexible and easy to use.
You can also take a hardship withdrawal, which allows you to withdraw up to 50% of your account balance, up to a maximum of $13,000.
However, keep in mind that hardship withdrawals are subject to certain rules and restrictions.
This feature can be a good option if you're facing a serious financial emergency or other unexpected expense.
You can even use the plan's online resources to help you determine if a hardship withdrawal is right for you.
How it Works
So, let's talk about how the NYC Deferred Comp 457 plan works. Pre-tax contributions to the plan reduce your taxable income for the year, which can be a big help on tax day.
You can contribute to the plan on a pre-tax basis, which means you won't pay taxes on those dollars until you withdraw them. This can be a great way to save for retirement while also reducing your tax liability.
The plan also allows for after-tax Roth contributions, which can provide potentially tax-free withdrawals in the future. This can be a great option if you think you'll be in a higher tax bracket when you retire.
Pre-tax contributions and associated earnings aren't subject to tax until withdrawal, which means you can keep growing your savings without worrying about taxes.
Withdrawal and Taxes
You can make withdrawals from your 457(b) account when you leave your job, and you get to control how you take the payments.
Withdrawals are generally taxable, but you won't have to pay the 10% penalty tax if you take distributions prior to age 59½, as long as the assets weren't transferred from other types of retirement accounts.
Roth
Roth contributions are made after-tax, rather than before tax, and withdrawn tax-free at retirement if certain criteria are met.
If you've made Roth contributions, you'll be happy to know that you won't have to pay taxes on those withdrawals in retirement.
Withdrawal Rules
You can withdraw from your 457(b) account when you leave your job, and you get to decide how to take the payments.
You can choose to take the money as needed or set up automatic payments, which gives you control over your investments even after you're no longer working for your employer.
Withdrawals are generally taxable, but there's a plus side - you won't face a 10% penalty tax if you take out the money before age 59½, unlike some other retirement accounts.
Retirement Savings
When you pass away, your 457(b) account assets will be distributed to the beneficiaries you've designated. This can help ensure your assets are paid out according to your wishes.
Designating beneficiaries is a crucial step, as it can also help avoid the potential costs and delays of probate. You can designate one or multiple beneficiaries to receive your account assets.
It's essential to review and update your beneficiary designations regularly to ensure they reflect any changes in your life, such as a new spouse or children.
Retirement Savings
Designating beneficiaries is a crucial step in planning for your retirement savings. You can designate one or multiple beneficiaries to receive any remaining assets upon your death.
Each 457(b) account must designate a beneficiary, or beneficiaries, to receive any remaining assets upon your death. This can help ensure your assets are paid per your wishes.
Designating beneficiaries can also help avoid the potential costs and delays of probate. Non-spouse beneficiaries may be able to receive additional tax benefits.
Having a clear plan in place for your retirement savings can bring peace of mind and financial security.
Retirement Rollover Options
When you're nearing retirement, it's essential to understand your options for rolling over your 457(b) plan. You can roll over your 457(b) plan to an IRA or another 457(b) plan.
The type of 457(b) plan you have determines your rollover options. Some plans have more flexible rollover rules than others.
Plan Details
The NYC Deferred Comp 457 plan is a valuable benefit for city employees. It's a supplemental retirement plan that allows you to save for your future on a tax-deferred basis.
The plan is administered by the Deferred Compensation Administration (DCA), a division of the New York City Employees' Retirement System (NYCERS). This ensures that the plan is managed with the utmost care and transparency.
You can enroll in the plan at any time, but it's recommended to start early to maximize your savings. The plan's annual enrollment period typically takes place in the fall, and you'll receive notification from the DCA with details on how to participate.
Sponsoring
Sponsoring a deferred compensation plan can be a bit complex, but I'm here to break it down for you. Local governments in New York State have the authority to sponsor such a plan for their employees.
To sponsor a plan, you need to follow the procedures outlined in Section 5 of the State Finance Law. This law permits counties, cities, towns, villages, school districts, community colleges, public benefit corporations, and special districts to sponsor deferred compensation plans.
The Rules and Regulations of the New York State Deferred Compensation Board detail the procedures and guidelines for administering a deferred compensation plan. These rules require all services provided to a deferred compensation plan to be granted after a competitive request for proposal procedures.
Some services that may be contracted include:
- Administrative services if the plan determines that the trustee or financial organization can perform this service
- Independent consultant services if the plan determines that the board or committee can perform this service
- Trustee services if the committee or board is to serve as the trustee
When submitting a proposal, you need to acknowledge that it complies with the requirements of the Board's Rules. You should also clearly indicate all direct and indirect fees, and fully disclose any sponsorship or similar relationship.
Plan

A 457(b) plan is a type of deferred compensation plan that allows local governments in New York State to sponsor a plan for their employees. This plan is authorized by Section 457 of the Internal Revenue Code.
To sponsor a plan, the local government must follow the procedures and guidelines outlined in the Rules and Regulations of the New York State Deferred Compensation Board.
The plan must provide the opportunity for participant assets to be invested in a broad range of investment alternatives, including fixed income and equity investments.
The deferred compensation committee must also provide financial statements of net assets available for benefits, which must be audited by a certified public accountant if the plan has 100 or more participants.
For plans with fewer than 100 participants, the committee must prepare an unaudited financial statement of net assets available for benefits and engage a certified public accountant to conduct a review of the plan's activities and conduct an agreed-upon procedures report on specific administrative procedures.

Services provided to a deferred compensation plan must be granted after a competitive request for proposal procedures, which includes the selection of a trustee, independent consultant, financial organization, certified public accountant, administrative service agency, and legal services.
Here are the services that may be contracted out:
- Administrative services if the plan determines that the trustee or financial organization can perform this service
- Independent consultant services if the plan determines that the board or committee can perform this service
- Trustee services if the committee or board is to serve as the trustee
Any proposal for services must acknowledge that it complies with the requirements of the Board's Rules, clearly indicate all direct and indirect fees, and fully disclose any sponsorship or similar relationship.
Frequently Asked Questions
Is a 457 deferred compensation plan a good idea?
A 457 deferred compensation plan can be a good idea for tax savings and retirement growth, especially for those with a pension. Consider using it to lower your income tax and grow your savings tax-free until retirement.
How do I get my money from my 457 Plan?
You can withdraw funds from your 457 Plan after separating from your employer or in case of an unforeseen emergency, and you also have the option to roll over your account into an IRA or another qualified retirement plan
Sources
- https://www.nyc.gov/site/olr/deferred/dcphome.page
- https://deferredcompboard.ny.gov/sponsoring-deferred-compensation-plan
- https://ess.nychhc.org/savingsretirement.html
- https://www.missionsq.org/products-and-services/457(b)-deferred-compensation-plans.html
- https://www.plansponsor.com/awards/2022-plan-sponsor-year/
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