NYS Voluntary Defined Contribution Plan
On March 16, 2012, Governor Andrew Cuomo signed into law Chapter 18 of the Laws of 2012, introducing a new defined contribution retirement plan option as an alternative to the State's existing defined benefit pension systems.
This new defined contribution plan option is available to all unrepresented NYS, NYC, and local public employees who are hired on or after July 1, 2013 and are paid at a rate of $75,000 or more on an annual basis.
The SUNY Optional Retirement Program (ORP), which is the largest and one of the oldest public defined contribution plans in the nation, was selected as the ideal vehicle to accomplish this, and was modified accordingly to permit newly eligible non-SUNY public employees. Vesting, vendors, and plan rules will follow existing SUNY Plan Document and policies.
Voluntary Defined Contribution Plan:
The New York State Voluntary Defined Contribution Program (VDC) is a defined contribution Retirement Plan that offers many ADVANTAGES over traditional defined benefit pension plans. Retirement benefits will depend on the value upon distribution of individually owned annuity contracts purchased on behalf of electing employees through employer and required employee contributions from one or more of the currently Authorized Investment Providers for the VDC, including TIAA-CREF, ING, MetLife, and VALIC.
Eligibility for the VDC is limited to unrepresented (non-union) public employees of NYS, NYC, and local agencies hired on or after July 1, 2013 with an estimated annual wage rate of $75,000 or more. The VDC is available to eligible employees from any public employer within NYS, including NYC, public authorities, and local municipalities. Current employees or transferring State employees whose immediately preceding employment was with another State agency shall not be eligible for the VDC and must remain with their current retirement system. To join the NYS VDC program, eligible employees can ENROLL ONLINE.
Allowable contribution limits will follow the definitions contained within §390 of Education Law, §131 of Retirement and Social Security Law, and §415 and §401(a)(17) IRS annual contribution limits; and will not be subject to the newly imposed caps and limitations applicable to Tier VI ERS/TRS members.
The current required Employee Contribution Rate in a given year is based upon regular compensation, as follows:
The current Employer Contribution Rate is 8% of gross salary.
Vesting occurs after 366 days of active service. This period may be waived for employees coming to public employment within NYS with active, employer-sponsored retirement annuity contracts from any of the currently Authorized Investment Providers. All contributions will become the property of, and all investments will be directed by, the participant upon vesting.
The VDC is designed to allow retirement at any age. Distributions from VDC contracts are permitted any time after separation from services, subject to an IRS 10% penalty for distributions prior to age 59 ½ , unless separating from service after reaching the normal retirement age of 55.
As a New York State Public Retirement Plan, distributions from the VDC are exempt from New York State Income Taxes. Please consult your tax professional for further information and guidance on how to report distributions on your personal income tax return.
The VDC includes several flexible options designed to allow participants to plan their retirement income distribution according to their own individual needs and preferences. These include periodic and systematic cash withdrawals, guaranteed lifetime annuity payments, and a variety of blended options and lifetime annuity dependent survivor payment levels.
Authorized Investment Providers:
There are currently four Investment Providers available under the VDC. Their web sites and telephone numbers are provided below.
VDC Plan Information:
VDC Plan Enrollment:
Please note that this information has been prepared as a general summary of the newly available VDC option. It cannot provide you with the complete details on retirement matters. You should carefully review and research the options available to you before making a decision as to which Retirement System to join. Only authorized representatives from each Retirement System or Investment Provider are adequately knowledgeable and experienced to fully address your questions or to assist you with many of the technical aspects of their respective Systems. The information contained in all SUNY publications and web sites is intended only as a basic summary overview and to provide you with basic points for your consideration. You are invited to contact representatives from the Retirement System in which you are interested for additional information or with specific questions about their respective System or specific benefits.
|Last Update - 7/22/14|