Starting Oct. 1, the Deferred Compensation Program, or DCP, will offer Roth or pretax contribution options. This choice gives you even more flexibility in saving for retirement. New and existing DCP customers can contribute to either or both options. What is pretax? With the DCP pretax option, your contributions are made before tax. Withdrawals, including investment earnings, are taxed as ordinary income in the year of withdrawal. What is Roth? With the DCP Roth option, your contributions are deferred from your already taxed income. Roth withdrawals including any investment earnings, are not taxed if you wait at least 5 years from the date of your first contribution and you are at least 59 1/2 years old.  How do I add Roth? Existing DCP customers can add Roth by logging into your DCP account and making the change. Or you can contact Voya at 888-327-5596 for assistance. New customers can enroll in DCP by completing this form. Attend a live Q&A You probably have a lot of questions about the new Roth option. You can attend a live Q&A this October to get more information for your specific age group. Wednesday, Oct. 4 – Roth for early career (age 18-35) Wednesday, Oct. 11 – Roth for mid-career (age 36-49) Wednesday, Oct. 18 – Roth for near retirement (age 50+) Wednesday, Oct. 25 – Converting your pretax balance to Roth (all ages) Sign up for a Q&A Savings tips based on your age: Roth for early career (age 18-35) You might be more than a few years from retirement age, but here’s the best part: you have the advantage of time. The longer your money is in a retirement savings plan like DCP, the more money you’ll have in retirement. That means, the money you put in today will earn interest for the next 30 years — and trust us when we say, that’s a lot of interest. Advantages of RothYour taxes might be higher in retirement because you’ll no longer have tax deductions for dependents or mortgage interest. For this reason, you might choose the DCP Roth option. When it comes time to retire, you can take money out of your DCP Roth tax-free.   Advantages of pretaxHowever, you may be enjoying the tax advantages you’re receiving now with DCP pretax. The pretax money in your DCP account can also be used to buy an annuity when you retire. For that reason, you may want to contribute to DCP pretax. You can contribute to both. Many people choose to have money in both pretax and Roth. No matter which option you choose, know that starting now allows you to take advantage of the next 30 years of compound interest. Roth for mid-career (age 36-49) If you’ve been a public employee for a few years now, you’ve probably been contributing to a DCP account and may have quite a balance saved up. Consider if you want to convert money from pretax to Roth. You can now convert any amount of DCP pretax funds to the Roth option. Any money you convert before the end of the year will count towards your 2023 income. You’ll be responsible for paying any taxes due when you file your taxes next year. To convert your existing DCP pretax account to the Roth option, complete a conversion request form or call the DCP record keeper at 888-327-5596 for assistance. You can contribute to both. Many people choose to have money in both pretax and Roth. The pretax money in your DCP account can be used to buy an annuity when you retire. Having two options allows you pull from different buckets of money. Let’s say you’re already contributing 5% of your income to DCP pretax. If you add a Roth with DCP you have the option to: Convert some or all the funds to Roth. Note: This money becomes taxable income, and you’ll be responsible for paying any taxes due; or Increase your rate and contribute to both (such as 3% to pretax and 3% to Roth, for a total of 6%); or Keep your contribution rate the same and split the difference (for example 2% and 3%, or 1% and 4%). Roth for those near retirement (age 50+) Many soon-to-be retirees may choose to add a Roth option to plan for late-life expenses. Deferring some of your paycheck now to a Roth option can help boost your retirement savings. Those funds will continue to grow over the next several years and when you’re ready, you can take them out tax-free. However, you must meet the minimum qualifications to withdraw your Roth funds tax-free. You must wait at least 5 years from the date of your first contribution and you cannot withdraw prior to 59 1/2 years old.   You can contribute to both. Many people choose to have money in both pretax and Roth. The pretax money in your DCP account can be used to buy an annuity when you retire. Having two options allows you pull from different buckets of money. Can I convert a DCP pretax balance to Roth? Yes. However, any money you convert before the end of the year will count towards your 2023 income. You’ll be responsible for paying any taxes due when you file your taxes next year. To convert your existing DCP pretax account to the Roth option, complete a conversion request form or call the DCP record keeper at 888-327-5596 for assistance. How much can I defer each year? If you are 50 years of age or older, you can contribute an additional $7,500 beyond the annual limit each year (a total of $30,000 in 2023). What are the annual limits? These 2023 limits apply to Roth and pretax contributions. This means whether you contribute to Roth, pretax or both, the combined totals must fall within IRS annual limits for the DCP 457(b) program. Minimum monthly contribution limit: $30 or 1% of your earnings Maximum annual contribution limit: $22,500 If you’re contributing to both pretax and Roth, it would be a combined maximum. As an example, you could contribute $10,000 to Roth, and $12,500 to pretax for a combined total of $22,500. If you are 50 years of age or older, you can contribute an additional $7,500 beyond the annual limit each year ($30,000 in 2023). More resources Attend a live DCP webinar or view a recorded DCP webinar. Use the DCP calculator to see an estimate of how much you’ll have in retirement with your current contribution. Explore the new Roth Pretax Comparison calculator. Listen to the DRS podcast or read the transcripts. Popular episodes: A Roth option for DCP How to choose a financial advisor Student loan forgiveness and PSLF DCP earnings and annuities [reblex id='14232']

Department of Retirement Systems recently learned of several email and phone schemes targeting public employees. Last week, an employee at the Washington State Department of Ecology got a call from one of these scammers. The employee, who will remain anonymous, received a call on her work cell phone from someone claiming to represent a non-profit that works with DRS. “The caller sounded believable and was very professional,” she recalls. “Who wouldn’t want free advice about retirement?” However, when the Ecology employee asked the caller to confirm the organization name and contact information, the call was disconnected. Thankfully, the employee did not give out any personal information on the phone and reported the call to DRS. She shared that one of the biggest reasons for reporting the threat was to help protect others. “I want fellow state employees to know what to look for and keep their guard up.” A handful of similar incidents have been reported from school and state employees in recent weeks. What to do If you are contacted by someone claiming to be a retirement planner working for DRS, hang up the phone or don’t open the email. You can report the incident by contacting DRS. DRS will never call or email you offering retirement planning assistance. If you would like to talk to someone at DRS about your retirement, you can schedule an appointment through your online account. How DRS keeps your account secure DRS employees receive training in cybercrime throughout the year to ensure the safety of our customers’ personal information. Your online account includes multi-factor authentication (MFA). MFA allows us to combine things such as your email, and text messaging to confirm and authorize access. DRS also provides Account Security Information that includes a short video and a list of tips and steps to take if you think you’ve been a victim of fraud. How to avoid scams Never give out your personal information to someone you don’t know without checking to see if they are who they say they are. This includes those who you think might be DRS employees but you aren’t sure. You can contact us directly if you think an email is fraudulent. Don’t share your passwords. Never provide your passwords through email, on the phone, through the US mail or in a video call (such as Zoom). [reblex id='14232']

For some, October might mean it’s time for pumpkin spice lattes and wool sweaters. For all of us, it’s Cybersecurity Awareness Month and time to do a security check up on our retirement accounts. It’s important to learn how to avoid the pitfalls and to do your best now to prevent fraud on your retirement accounts. You can build a stronger fortress around your accounts during Cybersecurity Awareness Month and throughout the year, by visiting the Account Security section on the DRS website. There, you’ll find a short and helpful two-minute video along with tips, suggestions and what to do if you think someone has tampered with your retirement accounts. Here’s a great tip, and it’s easy to do right now while you’re visiting the DRS website: Set up your retirement accounts if you haven’t already done so. Someone who gets their hands on your information could set it up for themselves. Plus, if you have DCP, Plan 3 or JRA, you’ll also want to establish an account through the record keeper, even if you never plan to use it. Rest assured, all DRS employees are trained in best practices for securing your account information and understanding the threats to your personal information. The Account Security section includes how to contact us if you should ever become a victim of fraudulent behavior affecting your retirement accounts. CISA is the federal cyber defense agency that supports October Cybersecurity Awareness Month. Their mission is to reduce risk to the nation’s cyber and physical infrastructure. They recently shared a list of four things you can do right now to stay safe online. One of those things is to keep your software up to date. When a new version comes out, apply it as soon as you can so your information stays secure. Online and retirement account safety go hand in hand. Be sure to use the information on the DRS and CISA websites so you can kick back with a nice warm beverage while you plan for retirement. The time is now. [reblex id='14232']

The 2023 Annual Comprehensive Financial Report (ACFR) reflects our on-going commitment to accurate and transparent financial reporting of the retirement systems. It contains the following detailed information: Financial statements and highlights DRS membership Employer participation Investment performance and policy Financial trends Demographics Operations Funding policy and progress Actuarial assumptions and methods DRS’ 2022 ACFR has been recognized with a certificate of achievement from the Government Finance Officers Association (GFOA). This was the 29th consecutive year DRS earned the highest form of recognition in governmental accounting and financial reporting. For more, read the GFOA announcement. Financial information for employers The 2023 Participating Employer Financial Information (PEFI) is now available. It includes allocation schedules and information to help employers participating in the state of Washington’s multiple-employer, cost-sharing retirement plans. The data assists DRS participating employers with preparing and presenting financial information in compliance with the requirements of the Governmental Accounting Standards Board (GASB). Where to find previous reports The financial reporting page includes links to reports published in the last few years. You can request previous ACFRs and PEFIs from the Washington State Library. Online versions of the ACFRs include volumes 2002-2020. See the PEFIs here. For volumes that aren’t available online, contact the Washington State Library. [reblex id='14232']