HomeMy WebLinkAboutDef Comp Plan.pdf Jun 28 2011 1 : 03PM HP LASERJET FAX p. 2
New York State
Deferred Compensation Plan
Roth 457: What Is it?
We recently Informed you that the Small Business Jobs Act of 2010 now permits Deferred
Compensation Plan participants to make Roth (post-tax) contributions. As a payroll center
responsible for remitting contributions on behalf of your employees, it Is necessary that you
Inform the Plan of your ability and intention to Implement the Plan changes related to Roth
Designated Contributions(Roth Contributions)on,or after July 1,2011,
Roth Contributions are deducted from the employee's paycheck on an after-tax basis. Employees
would be permitted to select the total percentage or dollar amount to be deferred from their
paycheck and the allocation between regular pre-tax deferrals and Roth Contributions.
For example, If an employee requests 25% of their paycheck to be deferred to the Plan, they
could allocate 10% to pre-tax deferrals and 5% to Roth Contributions. Employees would be
permitted to change their deferral amount between pre-tax and Roth amounts at any time by
contacting the Plan. These changes would be reflected on the payroll billing report you receive
from the Plan.
What are the benefits of Roth contributions to your employees?
• Assets grow tax deferred
• Distributions,If qualified,are income tax free
• Combined pre-tax deferrals and Roth Contributions are available up to the Individual
contribution limits which are $16,500 for regular deferrals and an additional $5,500 if age
50 and over
• Higher contributions may be available for employees participating in the Retirement
(Traditional)Catch-Up provision
• There are no Income eligibility limits to make Roth contributions to the 457 Plan.
• Roth contributions Investment allocations may be re-allocated after receipt
While there are many benefits to a Roth account, it is important to note that!
• Loans will not be permitted from the Roth portion of a participant's account
• Initial investment allocations for Roth contributions must be the same as for pre-tax
deferrals.
• Roth designated contributions,once received, cannot be recharacterized.
Nelther the company nor Its representatives give legal or tax advice. Please consult
your attorney or tax advisor for answers to specific questions.
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Nm York state
Deferred Compensation Plan
When may the Roth be a good idea for participants?
• If they anticipate being In a highertax bracket in retirement
• When they are early in their career and/or have a longer time horizon until
retirement
• When their income limits their ability to contribute to a Roth IRA
To better understand the Roth provision from an employee's perspective, please read the
enclosed"Roth Contributions to the NYSDCP" brochure or contact your local Account Executive.
What will you need to do?
If you elect to offer this provision to your employees, you will need to be able to process the
required after-tax deduction in addition to the regular pre-tax deferrals and corresponding payroll
reporting.
Electing employers will receive a separate payroll report for those employees who make Roth
contributions, Payroll reports for the Roth contributions will mirror the existing payroll reports,
except that Roth contributions will be clearly Identified In the header of the report.
For reference,a sample Roth payroll report has been included in this packet.
It is importantto note that;
• You must notify the Plan using the enclosed form to begin offering Roth contributions
• If you do not respond,Roth contributions will not be accepted from your payroll center
and we will notify you if any are received
• You will receive a separate billing report for Roth contributions and will be required to
submit a second payroll remittance file
• To assist you In monitoring contribution limits, over-deferral reports will combine both
contribution types
• Roth Contributions will be reported In box 12 of the employees' W-2 using an "EE"
Indicator
• You can decide to offer the Roth to your employees at anytime after July 2011
Please complete the attached form to Indicate If you will or will not allow your employees to
participate In the Roth provision.
NRM-8630NY-NY(O5/11) Plan Sponsor use Only
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New York State
Dererred Compensation Plan
NYSDCP Roth Contributions Participation Agreement
Employer Name:
❑ Yes, we will offer the Roth Contributions provision to our employees as of
July 1, 2011.
Yes, we will offer the Roth Contributions provision to our employees as of:
. 20
13 NO, we will not offer the Roth Contributions provision to our employees at
this tlme.
PnInt Nome. M
slanature: Phone#
Please Return to:
NYSDCP Administrative Service Agency
385Jordan Road
Troy,NY 12180