The City of Seattle Voluntary Deferred Compensation Plan

The City of Seattle Voluntary Deferred Compensation Program (DCP)  administrator recommends that you consider the following issues three to five years before your retirement:

• Last Three-Year Catch-up: Available only for the three years preceding your declared retirement year. Your retirement year can be no earlier than the date you are eligible for a full, unreduced pension. Documentation from the Seattle City Employees’ Retirement System (SCERS) or the Washington State Department of Retirement Systems (DRS) for LEOFF 1 or LEOFF 2 is required. Contact the DCP staff at DeferredCompQuestions@seattle.gov if you wish to participate.
• Investment Diversity and Appropriate Level of Risks: Is your account allocation aligned with your preferences and plan? Are you comfortable with the risk level?
• Beneficiary Designation: Review your beneficiary information on file with the City of Seattle DCP. Ensure it remains current, and contact the plan administrator to update it if necessary.
• Retirement Income Calculator/My Interactive Retirement Planner: Review your portfolio, including estimates of your pension and Social Security income. Make adjustments to your DCP as needed.
• Outstanding Loans: Make sure you understand the consequences of not paying off a plan loan by your retirement date. If you have taken a loan and fail to repay the balance, there are costs associated with the loan default. Here are some issues to consider when evaluating whether to take out or keep a DCP loan:
  • The money you borrow will no longer be invested in the market, so you’ll lose potential market gains and/or interest.
  • You’ll repay the loan with after-tax funds.
  • You’ll incur loan fees when you take out a loan, as well as annual loan fees for every year the loan remains unpaid.
  • If you take Leave, your DCP loan repayments stop because they are funded through payroll deductions, risking the loan going into default if you don’t make other arrangements to repay it.
• Leave Conversion: Converting vacation and other accrued leave may help you defer a larger-than-usual portion of your final-year compensation into the plan, potentially saving you money on taxes. Plan ahead to maximize your ability to convert vacation and other accrued leave.
• Ongoing Education: Visit the DCP/Empower online Learning Center for access to a wide range of financial planning calculators, financial wellness videos and articles, and monthly webinars covering relevant finance topics.
• Returning to Work: Your ability to take withdrawals from the DCP may be affected if you return to work for the city. You must coordinate with the plan administrator if you intend to take withdrawals and return to work.