The IRS limits for retirement savings programs like DCP have increased for 2024. Beginning Jan. 1, all DCP participants under age 50 can contribute up to $23,000 per year. These limits apply to Roth and pretax contributions. This means whether you contribute to DCP Roth, pretax or both options, the combined totals must fall within IRS annual limits for the DCP 457(b) program. The Washington Deferred Compensation Program, or DCP, is a terrific way to save for retirement. If you are already a DCP participant, now’s a great time to consider increasing your contributions. If you are not a participant and your employer offers DCP, consider signing up. Even a minimum monthly contribution of 1% can add up to big savings over time. Depending on your employer’s payroll, it can take up to 30 days for your account changes to go into effect. So, for the new year, you might want to start your changes now! If you are 50 or older, your DCP savings can increase even more with special catch-up options. Starting Jan. 1, you can contribute up to $30,500 per year. Save more with DCP If you put $200 a month into your DCP account, your balance could grow to $201,908 in 30 years. The amount you gain will be small at first but get larger over time. Here are the gains for a monthly $200 deposit at a 6% rate of return: $8,000 of additional earnings (10 years) $44,000 of additional earnings (20 years) $130,000 of additional earnings (30 years) Next steps Change your contribution online through your DCP account Check out the DCP information page New to DCP? Enroll now [reblex id='14232']

Retiring early isn’t something everyone longs for, but it might be worth considering if you haven’t thought about it already. As with all big decisions that leave us standing at the crossroads, deciding to retire early isn’t something you can take lightly. It’s not as easy as deciding on a dessert at a buffet, but it’s probably not as hard as picking a winning lottery ticket either. And before you ask – winning the lottery isn’t part of a serious early retirement plan. Instead, ask yourself this: Would you retire early if you knew it was possible to live in retirement close to the way you live in your working years? In some cases (depending on your plan and system), you could qualify for an early retirement with little or no reduction to your benefit if you meet a minimum number of service years. Whether you decide to retire early or not, think about when you hope to retire and ask yourself if you’ve saved enough. With more savings comes the opportunity to retire well. How much money in retirement is enough? It depends on your lifestyle and income. A good place to start is by assuming you’ll need about 75% of your current salary each year in retirement to live the same lifestyle as you have today. Then think about you and your family’s medical history and longevity to estimate your potential life expectancy. You can use the Social Security Administration’s (SSA) longevity calculator to get a rough estimate. Retiring early also means managing healthcare costs for the long haul. Remember, if you retire before age 65, you may need to have more saved to cover medical expenses in the years before you can apply for Medicare. You’ll need to pay for healthcare coverage during that time and beyond. What you can do now If your employer offers the Deferred Compensation Program (DCP), and you’re 50 or older, increase your account with a feature called “Catch-up options.” Be as healthy as possible. If you don’t exercise regularly or eat healthy food, start now. This can potentially lower your medical bills in retirement. If you tend to spend a lot, are you willing to curb some of that spending and create a budget you can live with in retirement? The sooner you can learn to live within a budget, the sooner you’ll be able to save more for retirement. When you’re young, you can take advantage of compounding interest by saving early and consistently. If you are a little late to planning for retirement, you will need to save more of your paycheck to catch-up during your remaining working years. No matter your age, you can also consider working with a financial professional. They can help you develop a savings strategy, prepare for unforeseen expenses and create a plan to achieve your retirement goals. After you retire Here are some things you can do at and after you retire early that can help you down the line. Delay taking your Social Security check. It might be tempting to include your Social Security benefit in your early retirement plan budget. The SSA allows you to begin receiving a benefit at age 62, but remember that your benefit will be reduced if you start taking payments this soon. The SSA has established full retirement age at 66 if you were born between 1943 and 1954, or age 67 if you were born in 1960 or later. And if you can delay taking payments until age 70, your benefit amount may increase by quite a bit. See all the age requirements on the SSA’s website, along with information about your benefit estimate based on age. Purchase an annuity. At the time of retirement, you can purchase a DRS annuity and take advantage of a guaranteed lifetime income stream. You can return to work. Many of us have the idea that retirees return to work as Wal-Mart greeters. You can do that, sure. But did you know there are early retirement rules that allow some retirees to work up to 1,040 hours for a DRS-covered employer and continue receiving benefits? See the rules for your plan and system. Go early or play the long game. Either way, if you plan well and save wisely, your years in retirement might make you feel like a million bucks. Check out these additional DRS resources to see if early retirement is right for you: Podcast episode 6 – What’s the best way to save for retirement? Podcast episode 9 – Retiring at 55 pros and cons Video: Early retirement for PERS, TRS and SERS Webinar on Dec. 16: Early retirement for PERS, TRS SERS webinar sign up [reblex id='14232']

Do you have DCP or Plan 3? If so, keep in mind that federal law requires you to withdraw a minimum amount from your investment account when you reach age 73 if you are separated from employment. The DRS record keeper, Voya, calculates this required minimum distribution (RMD) and pays out this amount to you automatically each year. You can also take out your own withdrawals to meet the minimum. Completing the annual minimum withdrawal, either on your own or automatically through the record keeper, helps you avoid the tax penalty (up to 25%) the IRS can impose if the minimum amount is not withdrawn. Why do DCP and Plan 3 have an RMD? Your pretax DCP contributions and all Plan 3 contributions are made before your income is taxed. This means the IRS is owed taxes on those money sources. The annual minimum distribution ensures the IRS receives the income tax monies owed. Without the annual distribution, the IRS could impose an additional tax penalty for funds not withdrawn. Who is not required to withdraw an amount? Contributing employees: If you are still contributing to your plan, the RMD withdrawal is optional. Plan 1 and Plan 2 customers: If you are a Plan 1 or 2 member who is receiving a monthly pension benefit, you don’t need to take an RMD from those plans. DCP Roth account balances: As of 2024, the DCP RMD applies only to DCP pretax balances, not DCP Roth balances, which are already taxed. How do you calculate your RMD? To calculate your RMD amount, start with your previous year’s Dec. 31 investment account balance. Next locate your age in the RMD tables. Take your total investment account balance and divide it by the period that corresponds with your age. The resulting number is your required minimum amount. If you are a member of Plan 3 and DCP, you have two investment accounts that are subject to minimum distribution requirements, and you calculate these separately. How do you make changes to your RMD? While the required minimum distribution is issued to you automatically, you do have options to make changes to the withdrawal. To find out more, contact the DRS record keeper at 888-327-5596 or visit the RMD Section of the IRS website. [reblex id='14232']

Like pumpkins, cooler days and football, the state’s Combined Fund Drive  – CFD – campaign returns each fall. If you’re retired or are planning to retire soon, keep in mind that you may continue – or begin – to donate to CFD after you retire. “The biggest thing we want our retirees to know is that our donor system is an ‘opt out’ program,” says CFD Marketing and Training Coordinator Leila Anoina. “So, if they are currently donating and then go into retirement, their donations follow them until they go into their account and cancel it or contact us.” If you were not donating to CFD through payroll deduction at the time of your retirement, you can begin doing so at any time. “Retirees can set up reoccurring donations to their favorite charities through the CFD website,” says DRS Retirement Readiness Director Seth Miller. CFD is Washington state’s workplace giving program for public employees and retirees. The program is made up of over 4,500 charities. For the last five years, over $5.1 million has been pledged annually by CFD donors. Donors may give through monthly payroll deductions, a one-time contribution and limited-time contributions. More information on both CFD and all its member charities is available on the CFD website. Just like health care deductions, DRS cannot change CFD contributions for retirees. You must make changes directly through the organizations. [reblex id='14232']