DCP – Roth & pretax options
DCP helps you stock up for retirement with two types of savings options – Roth and pretax.
What is DCP?
The Deferred Compensation Program is a supplemental retirement savings program you control. The Washington State Department of Retirement Systems (DRS) administers this 457(b) plan, which is similar to a 401(k) or 403(b) that many employers offer. Over 100,000 Washington public employees have saved with DCP.
With DCP, you can:
- Save more for retirement
- Choose your contribution amount
- Make pretax or Roth contributions (starting Oct. 1)
- Start or stop saving anytime
- Change investment options
- Manage your account online or by phone
DCP gives you options
DCP gives you even more flexibility to save for retirement by providing pretax and Roth options. Each option affects when your retirement contributions will be taxed.
What is pretax? With the DCP pretax option, your contributions are made before tax. Withdrawals, including investment earnings, are taxed 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 meet the minimum qualifications.*
Compare pretax and Roth options
| Pretax | Roth | |
|---|---|---|
| Minimum contribution | $30 or 1% of your gross annual salary per paycheck, per option | |
| Maximum contribution | $23,000 (In 2024. See more on annual limits) | |
| Taxes on contributions | No, contributions are not taxed | Yes, contributions are taxed |
| Taxes on withdrawals | Yes, withdrawals including investment earnings are taxed | No, there are no taxes for withdrawals including investment earnings* |
| Conversions | No, you cannot convert DCP Roth dollars to pretax | Yes, you can permanently convert DCP pretax dollars to Roth |
| Rollovers | Yes, you can roll eligible pretax funds in or out | Yes, you can roll eligible Roth funds in or out (Roth IRA is not eligible) |
*You must meet minimum qualifications to withdraw your Roth funds tax-free. These include a five-year holding period from the year of your first contribution and a minimum age of 59½. If you withdraw before meeting these, any investment earnings will be taxed.
More DCP options
Contributions
DCP savings starts as low as 1% per month (or $30). Contributions are automatically deducted from your paycheck making saving easy. Choose a dollar or percentage amount for your contributions. The percentage amount will adjust automatically to defer a consistent portion of your salary.
Investments
What do you need to know about investing? Your funds are managed for you by a professional team. But if you want to be more involved, you can select from a menu of investments. You can also change your investment fund at any time.
Auto-escalation
Log into your account to initiate an auto escalation that allows your savings to increase automatically over time. Start or stop the increase at any time.
Annuities
Use all or a part of your DCP balance to fund a retirement plan annuity. See your plan page for more information.
Questions?
If you have additional questions about DCP, contact the DRS record keeper, Voya Financial at 888-327-5596.
