Catch-Up Provisions of the Deferred Compensation Plan
The catch-up provision is only available to participants as early as three years prior to their eligibility for normal retirement (either by age or years of service), and allows making up prior deferred compensation contributions that were less than their allowable maximum in years since January 1, 1979.
Even if you did not participate in the Deferred Compensation Plan (DCP) in past years, but were a state employee, you may still qualify and be eligible for catch-up. The amount of past DCP contributions available to you under the catch-up provision are those contributions you were eligible to make, but did not, up to the total catch-up balance.
You may defer all or any portion of your catch-up balance over three consecutive calendar years. If you are interested and think you might want to participate, let us know and we will verify your eligibility to participate and calculate your total available “catch-up” balance.
- The catch-up provision may only be started as early as three years prior to your normal retirement date. You may NOT use catch up for more than the three-year period once you select it.
- Catch-up is in addition to the regular deferred compensation contributions, but in no event, may you defer more than $36,000 per year.
- You may only use catch-up to the extent you did not make the maximum contributions in prior employment years. This means that we will verify your contributions from prior years using payroll records.
- The maximum catch-up deferral you are eligible for does not obligate you to contribute that amount. You may defer less than the maximum catch-up deferral to your DCP account.
- You may NOT restart catch-up at another time if you don’t make all the contributions in the three-year consecutive calendar year period once you start it.
- The Deferred Compensation Plan defines age 70 ½ as retirement age. However, you may need to select a different “retirement age” for the purposes of using catch-up. To select a different retirement age, a DCP ‘Catch-Up’ Irrevocable Election Form needs to be completed. Please email the Deferred Compensation specialist for this form.
If you decide to use the catch-up provision during 2016, you must first change your deferred compensation retirement age to the age you will be in 2019. Your three catch-up years would then be limited to 2016, 2017, 2018 with 2019 as your retirement year for the DCP. This stated retirement age will not affect any other retirement program, and is for deferred compensation purposes only. Declaring 2019 as your “retirement year” does not mean you have to take your deferred compensation then, only that you are eligible for normal retirement in that year. Regular deferrals can continue to be made to your DCP even after you have completed participation in the catch-up provision.
If you are interested in knowing your total available catch-up balance or have any other questions regarding the catch-up provision, please email Empower Retirement Services or call Empower at (800) 526-0560 if outside the Anchorage area or (907) 276-1500 if calling from Anchorage.