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Deferred Compensation

The New York City Deferred Compensation Plan (DCP) is an employee benefit available to New York City employees.  DCP is comprised of two programs: a 457 Plan and a 401(k) Plan. Eligible employees may select either the 457, the 401(k), or both. 


The purpose of the Deferred Compensation Plan is to encourage employees to make and continue careers with the City of New York and to provide eligible employees with a convenient way to save on a regular and long-term basis, thereby providing for their retirement. 


For employees who are members of a City pension plan, DCP is a supplemental savings plan to their pension and Social Security. For non-pension member employees, DCP, if elected, is their sole retirement plan in lieu of Social Security. For non-pension member employees who are contributing less than 7.5% to either the 457 Plan or the 401(k) Plan, DCP is a supplement to Social Security.


Through convenient payroll deductions, the 457 and 401(k) allow employees to save regularly with before-tax and Roth (after-tax) dollars. 


Contributing on a pre-tax basis allows employees to defer federal, state, and local income taxes. Pre-tax contributions and their earnings will remain tax deferred until withdrawn through Plan benefit payments. 


Employees making contributions on a Roth (after-tax) basis pay income taxes up front, but all earnings on qualified distributions are tax-free. 


In March 2006, the Deferred Compensation Plan added a Roth component to the 401(k) Plan.  In April 2011, a Roth component was added to the 457 Plan.  Employees enrolling in the Deferred Compensation Plan can choose to contribute on both a pre-tax and post-tax (Roth) basis to one or both Plans.  If you are already a 457 or 401(k) Plan participant, then you can make Roth contributions by simply accessing your existing 457 or 401(k) account and making a deferral change.


Eight in ten investors either feel they are not saving enough for retirement or aren't sure how much they need to save.  Click here to see your Personalized Financial Snapshot.