Taking Deferred Compensation from Final Check

Instructions For Employees Leaving State Service

Employees leaving State service can request to have a final deferred compensation contribution taken on their final payroll check. Your final check will include payment of any unused personal/annual leave in addition to your final pay. Some employees prefer to reduce their tax liability by deferring income from their final check into their deferred compensation account.

If you want to request this deferral, please complete the memorandum (linked above), and return it to the Division of Retirement and Benefits via fax or as a PDF file email attachment as noted on the form (originals are not required).

Please note: if your last day of work is in December, and your final pay will be paid to you in January of the following year, you will not be able to defer from your final check. Please contact the division for options on deferring to the plan through a leave cashin in advance of your final month of employment.

Caution: The signed memo must be received by the Division of Retirement and Benefits (DRB) in the month prior to your last day of employment. For example, if your last day of employment is anytime in the month of April, the memo for doing this must be received by DRB no later than March 31. This deadline is required by the plan document in order to comply with IRC regulations.

For employees not participating in the catch-up provision of deferred compensation, the maximum total deferral for 2021 (including regular deferrals from normal payroll, leave cash-ins, and final check) is either $26,000 (for participants aged 50 and over) or $19,500 (for participants under age 50). Employees participating in catch-up may be eligible to defer as much as $39,000 in 2021, depending on their prior deferred compensation deferrals. These dollar amounts may be adjusted each year by the IRS. Dollar deferrals are net (after deduction) of any required SBS and applicable Medicare deductions.

If you wish to defer the maximum amount (from both leave and pay) from your final check, you should check the top box on the form. The middle box should be used if you wish to defer a specific dollar amount (up to the maximum amount) from your final check.

If you wish to defer only the dollar value (net of any required SBS and applicable Medicare deductions) of your leave balance, you should check the bottom box on the form.

If you are not currently enrolled in the deferred compensation plan and wish to defer income from your final check, or if you have never used the catch-up provision of deferred compensation and wish to defer more than your age based limit noted above, please contact the Member Services Contact Center at (907) 465-4460 or (800) 821-2251 (toll free), Monday through Thursday between 8:30 a.m. and 4 p.m. and Friday between 8:30 and 3 p.m. Alaska Standard Time, or by email.

Caution: Both enrollment in deferred compensation, as well as electing to participate in the catch-up provision require signed forms which must be received by the Division of Retirement and Benefits by the 25th of the month prior to your last day of employment or sooner. Due to processing time, please contact Empower or DRB two weeks prior to this deadline if you need to enroll in DCP or are considering participating in catch-up. (Deadlines may vary for employees paid on a biweekly schedule. Please email the Deferred Compensation specialist for additional information.)