Deferred compensation plans in New York City, also known as NYC, are a type of compensation arrangement that allows employees to defer a portion of their salary until a future date. These plans are widely used by employers to attract and retain talent while offering tax advantages for both the employee and the employer. The New York City Deferred Compensation Plan, also known as DCP, is one of the most popular deferred compensation plans available to NYC employees. It is a voluntary program that allows participants to contribute a portion of their salary on a pre-tax basis. Contributions to this plan can be invested in a variety of investment options chosen by the employee, with the potential for growth over time. One of the key benefits of the NYC Deferred Compensation Plan is the tax advantage it offers. By deferring a portion of their salary, employees can reduce their taxable income in the current year, potentially lowering their overall tax liability. Additionally, any investment growth on the deferred contributions is also tax-deferred until distribution in retirement, allowing for potential accumulation of wealth over time. Another type of deferred compensation plan available in NYC is the 457(b) plan, which is specifically designed for employees of government and certain non-profit organizations. Like the NYC Deferred Compensation Plan, the 457(b) plan allows participants to contribute a portion of their salary on a pre-tax basis. Participants can also choose from a range of investment options and enjoy the tax advantages of deferred income. It is important to note that deferred compensation plans, including those in NYC, have certain restrictions and limitations. For instance, there are annual contribution limits set by the IRS, and early withdrawals may be subject to penalties and taxes. Therefore, employees should carefully consider their financial goals and consult a financial advisor before participating in a deferred compensation plan. In summary, a deferred compensation plan in NYC refers to a compensation arrangement where employees can defer a portion of their salary until a future date, offering tax advantages and potential growth through investment options. The New York City Deferred Compensation Plan (DCP) and the 457(b) plan for government and certain non-profit employees are two examples of such plans. It is crucial for employees to understand the plan's rules and consult professionals to make well-informed decisions.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.