Frequently Asked Questions (FAQs)

How do I make contributions to my DCP account?

At enrollment, select a percentage of pay or dollar amount to contribute each pay period. You can contribute your funds as either Pre-tax, Roth (after-tax), or a combination of both. Your contributions will be automatically deducted from your biweekly paycheck (26 paychecks per calendar year). You can change your contributions at any time by logging into your DCP account (Contributions & Savings > Manage Contributions > Update My Contributions). Contribution changes will take effect the following calendar month. Find out more here.

What are the different types of contributions I can make to my DCP account?

Pre-tax Contribution: You contribute money into your account before it is subject to federal income tax, and any growth is tax-deferred. You do not pay federal income tax on these contributions and their earnings until you withdraw them from your account.

Roth (after-tax) Contribution: You contribute money into your account after it has been taxed; any growth is tax-free as long as it is held in your account for at least five years and you are at least age 59^½ upon withdrawal.

You can learn more about the contribution types here.

How much should I contribute?

Your situation and retirement goals will play a big part in deciding the amount you contribute. On average, City employees contribute 7% of pay to their DCP account. A contribution of 7% or higher over a full career with the City will aid in achieving the goal of retiring without reducing your standard of living. Use our useful Retirement Calculator available after you login to your DCP account at LA457.com to help you determine how much you’ll need to contribute to meet your retirement goals after factoring in your expected pension benefit. If you prefer a personal touch, contact our Local Retirement Counselors.

What's the lowest amount I can contribute to get started?

You can start contributing with as little as 1% of pay or $1 and gradually increase your contribution on a timetable you select.

Are there limits on the amount I can contribute to my DCP account?

The federal government provides for three maximum contribution limits:

1. Below age 50
2. Age 50+
3. Special Catch-Up

The City’s payroll system will, in most cases, reject your contribution amount if it will take you over your eligible maximum limit; however, it is important that you also monitor your annual contribution amount (particularly if you transfer between the City and DWP, or if you are enrolled in Special Catch-Up). View this year’s contribution limits. Annual limits are set by the IRS and may change in the future.

How do I schedule automatic contribution increases?

Log in to your DCP account at LA457.com and select Contributions & Savings > Manage Contributions > Pick Up The Pace and Save More > Set Up Now. The Rate Escalator schedules automatic increases in your contribution rate based on the percentage and schedule you elect. You set the percentage (from 1% to 99% of your gross pay or up to the maximum dollar amount). You set the frequency of increases: one-time update, quarterly, semi-annually, or annually on a rolling date basis. You can start and stop this feature at any time.

What happens to the money I contribute?

Once you enroll in the DCP and decide how much to contribute, you will choose from the DCP’s available investment options to invest your contributions. Your contributions will be automatically deducted from your biweekly paycheck and deposited to your investment selections. You can change your investments and the percentage invested in each option at any time. You may also transfer your holdings among the DCP’s investment options, subject to any limitations imposed by the investment providers.

What investment options are available?

The DCP offers a variety of investment choices, including interest-bearing savings options, bond funds, and stock funds. The DCP also offers a Self-Directed Brokerage Account (SDBA) option that provides access to additional mutual fund choices and individual securities for an additional cost. Please refer to the individual investment option profiles at Investments for more detailed information.

May I change my investment options?

You can transfer existing balances among options or redirect future contributions at any time, although certain transfer limitations may apply to specific options. Changes may be made by logging into your account or by calling 844-523-2457. Funds may impose redemption costs on certain transfers, redemptions, or exchanges if assets are held for less than the period established by the investment providers. For more information, please refer to the investment option fact sheets. Also, transfer restrictions may apply between the Deferred Compensation Plan Stable Value Fund and other DCP investment options. Review the investment option profiles and/or contact a Local Retirement Counselor.

What is the Self-Directed Brokerage Account (SBDA)

The Self-Directed Brokerage Account (SDBA) is an investment option offered through Charles Schwab & Co., Inc. (Member SIPC). The SDBA option (also known as the Schwab Personal Choice Retirement Account (PCRA)) provides you access to a broad universe of publicly traded mutual funds, equities, bonds, Exchange Traded Funds (ETFs), and certificates of deposit. The SDBA is for knowledgeable investors who acknowledge and understand the risks associated with many of the investment choices available through the SDBA. Participants in the SDBA pay an additional $50 per year, which is prorated quarterly, and are still required to pay DCP administrative fees. SDBA activity is reflected on a separate quarterly account statement issued by Charles Schwab that will detail the investment holdings and activity within your SDBA, including any costs imposed in connection with the account. Please note that you will need to maintain a minimum of $2,500 in your core DCP account in addition to any funds you have in the SDBA. Learn more at schwab.com/pcra or by calling Charles Schwab at 888-393-7272.

How do I increase or decrease my contribution amount?

You can increase, decrease, or stop your contributions by calling 844-523-2457 or by logging in to your DCP account at LA457.com. Be sure to confirm both your Pre-tax and/or Roth (after-tax) contribution elections to ensure your total contribution amount is accurate. Changes will take effect with the next available pay period in the calendar month following the month the election is made. If you encounter any issues with your City payroll contributions, please contact a Local Retirement Counselor.

If I need to stop contributing, can I?

Yes. You may stop contributing by setting your future payroll contribution to $0 at any time after you enroll. You can do this by logging into your DCP account at LA457.com or by calling 844-523-2457. Changes will take effect with the next available pay period in the calendar month following the month the election is made.

How can I start contributing again?

Call 844-523-2457 or log in to your DCP account at LA457.com to resume your contributions (Contributions & Savings > Manage Contributions > Update My Contributions). Change your deferral amount from $0 to a percent of pay or fixed dollar per paycheck biweekly.

What happens if I am receiving “Injury on Duty (IOD)” pay or am otherwise not being paid by the City?

Due to its tax treatment, Injury on Duty (IOD) pay is not eligible to be deferred into the DCP. If a paycheck is composed solely of IOD pay your regular DCP deferral will not be taken. If a paycheck includes IOD combined with other income sources such as regular hours worked, holiday, or sick time, your deferral will be taken if your eligible income is equal to or greater than your elected deferral amount. If you have any questions, please contact a Local Retirement Counselor.

Can I convert my Pre-tax contributions to Roth (after-tax) contributions?

Yes. All converted amounts will be invested in the same manner as they were prior to conversion. The amount of the conversion is reported as taxable income in the year of the conversion and the transaction is irrevocable. Once the funds are converted, you will receive a 1099 to file with your taxes for the following year.

Is there a time limit for requesting an In-Plan Roth Conversion?

You can convert your funds anytime, as an active employee or as a retiree. There is no limit on how much you can convert.

How do I request an In-Plan Roth Conversion?

To request an in-plan Roth conversion, complete and submit the In-Plan Roth Conversion Form available logging in to your DCP account (select Plan Details > Forms). Please allow five to seven business days for processing.

Can my savings and investments in another retirement plan be transferred into the DCP?

Pre-tax Assets: Yes, if eligible. You can roll over Pre-tax retirement funds from another employer’s eligible governmental 457(b), 401(a), 401(k), or 403(b) plan or from your personal traditional IRA. We will provide you with one consolidated statement for the various funds you roll into the DCP, and you will have access to the same investment choices available for your DCP contributions.

Roth (after-tax) Assets: No. Roth (after-tax) IRA contributions cannot be rolled into the DCP.

Visit the Rollovers page for more information.

Can I roll my DROP funds into the DCP?

Yes. Sworn officers exiting the Deferred Retirement Option Program (DROP) may roll a portion or all of their DROP funds into the DCP. There is no age requirement for rolling money in. However, rollovers may be subject to a 10% early distribution penalty if withdrawn before age 59^½. Visit the Sworn Page or contact a Local Retirement Counselor for more information.

Can I convert my Pre-tax contributions to Roth (after-tax) contributions?

Yes. All converted amounts will be invested in the same manner as they were prior to conversion. The amount of the conversion is reported as taxable income in the year of the conversion and the transaction is irrevocable. Once the funds are converted, you will receive a 1099 to file with your taxes for the following year.

Is there a time limit for requesting an In-Plan Roth Conversion?

You can convert your funds anytime, as an active employee or as a retiree. There is no limit on how much you can convert.

How do I request an In-Plan Roth Conversion?

To request an in-plan Roth conversion, complete and submit the In-Plan Roth Conversion Form available logging in to your DCP account (select Plan Details > Forms). Please allow five to seven business days for processing.

Can I borrow from my DCP account?

The DCP loan feature allows you to borrow funds from your account to support other financial objectives. Additionally, unlike onventional loans, when you borrow from your DCP account all of the interest is paid to you rather than a third-party lender. In other words, you’re not only the borrower, you’re also the lender.

What types of loans are available and what are the repayment periods?

General loans — This loan type can be requested for any reason, and you can choose a repayment term of 1 to 5 years.

Residential loans — This loan type can only be requested for the purchase of a principal residence. You can choose a repayment term of 1 to 15 years. All residential loans require a signed promissory note, a Truth-In-Lending statement, and the appropriate documentation. You may only have one residential loan at any one time.

What is the interest rate for taking out a loan?

Both types of loans (General loans and Residential loans) have the same interest rate, which is set at 2% above the Prime Lending Rate as declared in The Wall Street Journal on the first business day of each month. The interest is paid back to your DCP account.

How much can I loan to myself from my account?

You are eligible to take up to two simultaneous loans from your account during any given time. The sum of both loans must not exceed the lesser of the following amounts (minus the highest outstanding loan balance(s) during the last 12 months and any defaulted loans including accrued interest): $50,000 or 50% of your account balance. The minimum loan amount is $1,000, which means you must have at least $2,000 in your account to be eligible to take out a loan.

Who is eligible to take out a loan?

Both active employee participants and participants who have separated from service may take loans. For active participants, loan payments must be made through payroll deduction, unless you are paying off a loan. For participants who have separated from service, payments are due monthly and may be made via cashier’s check, money order, personal check, or automatic deduction from your checking or savings account. Loans can be paid in full at any time; there is no early prepayment penalty.

Are there any fees for taking out a loan?

There is a one-time $50 loan origination cost and a $25 annual account maintenance cost that is deducted quarterly ($6.25 per quarter) until your loan is paid in full. All interest that accrues is paid back into your DCP account.

How do I initiate a loan?

Active participants can initiate loans electronically by logging into their DCP account at LA457.com (Loans & Withdrawals > Summary > Request a Loan). Participants who have separated from City service can apply for a loan by completing a Retired/Terminated Participant Loan Application Form, which can be obtained by logging into their DCP account at LA457.com (select Plan Details > Forms) or by calling 844-523-2457.

Can I make additional loan payments?

• Accelerated payments — You are able to make future loan payments (not to exceed 90 days) to prevent your loan from defaulting if you are planning a leave of absence. However, if you choose this option and your leave of absence is longer than 90 days, you will need to make additional payments or complete a Leave of Absence Form. Accelerated payments must be equal to the bi-weekly or monthly payment amounts.
• Principal Reduction Payments — You are able to make payments on the principal, which will shorten the length of your loan and reduce interest paid back to your account. Interest will continue to accrue and be debited from future loan payments according to the fixed amortization schedule generated upon the loan’s origination; the schedule does not re-amortize upon making additional Principal Reduction Payments.
• Loan Payoff — You are able to pay off your total loan balance in full anytime. There is no early repayment penalty. To receive the loan payoff amount (principal due plus outstanding interest), you can log in to your account or call the Service Center at 844-523-2457. The loan payoff amount is valid for 30 days. You may submit your payment in two ways: complete a Loan Payment Request Form and send your payment as directed on the form or complete the payment by logging into your DCP account. Additional payments may be made via cashier’s check, money order, or personal check.
• Past due payments — You are able to make any missed payments to bring your account current. The payments must be equal to the bi-weekly or monthly payment amounts. You will need to call the Service Center to confirm the payment amount and due date needed to bring your loan current. We will send you a late notice; however, you are ultimately responsible for making your loan payments. If you allow your loan to default, the outstanding loan balance, plus interest, will be reported as additional taxable income and you will receive a 1099 tax form to report income on your tax return.

How long does it take to process a loan?

Loans are processed within three to five business days and funds are sent out two business days after processing. Loan funds can be sent via direct deposit to your checking or savings account within two to three business days after processing. Your banking information must be on file for seven business days for loan funds to be deposited into your account. You can also pay $25 for express delivery for loan funds to arrive two to three business days after processing.

What happens if I take a leave of absence?

Please contact a Local Retirement Counselor at 213-978-1601 immediately prior to going on a leave of absence to discuss your loan options. They can also assist you if you have an active loan and are not being paid or you have noticed that the loan payment is not being taken from your check. This can help to ensure that your loan does not go into default. If timely payments are not received, your loan will go into default, meaning the outstanding loan balance, plus interest, will be reported as additional taxable income.

You must complete a Leave of Absence Form before and after your leave, or otherwise send in manual payments in a timely manner, to prevent default. Keep in mind, you are ultimately responsible for making your loan payments or timely providing notification to the DCP within specified due dates. For issues regarding a leave of absence, please contact a Local Retirement Counselor. If you go on leave or absence or return from a leave of absence, you must notify the DCP by completing the LOA form, which can be found here.

What happens if I separate from City service (e.g. resignation, retirement) and I still have an outstanding loan?

When you separate from employment with the City, you have three options for managing your outstanding loan:

• Continue making loan repayments — Your loan will be automatically converted from bi-weekly to monthly payments. Payments may be made via cashier’s check, money order, or personal check. You will also receive a notification from Voya for an option to have your loan payments deducted from your checking or savings account.
• Pay your loan in full — You can pay our loan off anytime by logging into your DCP account at LA457.com. You can also complete a Loan Payment Request Form and send your payment as directed on the form.
• Cease loan payments — If you choose to stop making loan payments, your outstanding loan balance will be treated as a full distribution. Full distributions are taxable events, and a 1099 tax form will be issued so you can report the distribution as taxable income

If you have any questions or need assistance, contact a Local Retirement Counselor.

Can I use my DCP account as collateral for other loans?

No. You cannot assign, pledge, sell or otherwise transfer your account for any purpose, including applying for a loan.

Where do I find more information on loans?

The Loan FAQ and other information regarding active employee and/or retiree loans is available on the Loans page.

What forms do I have to file with my federal or state income taxes for contributions?

No forms are required. Your Pre-tax and Roth (after-tax) contributions will be indicated on your annual W-2 that you receive from the City. If you need a duplicate copy of your W-2, please contact the City Controller’s Office or the DWP’s Paymaster’s Office.

Do I need to report any account earnings?

No. Do not report any earnings on either your federal or state income tax forms. Any earnings on your Pre-tax deferrals are tax-deferred until withdrawn; earnings on any Roth (after-tax) deferrals are not taxable if taken as a qualified distribution after you satisfy the five-year holding period and after age 59^½.

When will the contributions and any earnings be taxable?

Your Pre-tax assets are taxable as ordinary income during the years in which they are distributed to you or your beneficiaries. Earnings on Roth (after-tax) assets are not taxable if they’re taken as a qualified distribution. A qualified distribution is one that occurs at least five years after the year of the employee’s first designated Roth contribution (counting the first year as part of the five) and is made:

• On or after attainment of age 59^½,
• On account of the employee’s disability, or
• On or after the employee’s death.

How much will my Pre-tax withdrawals be taxed?

At the time of this distribution, federal tax is withheld at 20%, and state tax is withheld based on your state of residency at the time of distribution. You may owe more or less income tax depending upon your personal tax situation. By February of the year following the year in which you receive a distribution, you will receive a Form 1099-R for the distribution amount. Roth (after-tax) distributions are tax-free if you are age 59^½ or older and the five-year holding period has been met.

If I have a financial hardship, can I withdraw funds from my DCP account?

You may be eligible to take a hardship withdrawal while you are employed if you meet the definition of a financial hardship under IRS guidelines. A withdrawal is allowed only for an unforeseeable emergency that causes severe financial hardship of the participant or beneficiary resulting from:

1. Illness or accident
2. Loss of property due to casualty (e.g. natural disaster)
3. Other similar extraordinary and unforeseen circumstances arising as a result of events beyond the control of the participant or beneficiary.

To apply for a hardship withdrawal, call 844-523-2457 or log into your DCP account at LA457.com (Loans & Withdrawals > Summary > Request a Withdrawal).

What is "Special Catch-Up"?

"Special Catch-Up” refers to provisions of the Internal Revenue Code that permit participants who are within three calendar years of normal retirement eligibility (meaning retirement without a penalty or actuarial reduction in benefits) to defer up to double the below-age-50 contribution limit. You are only eligible for Special Catch-Up if you contributed below the annual contribution limit in prior years of eligibility. Contact a Local Retirement Counselor to enroll in the Special Catch-Up provision (this process cannot be completed online).

Please note: Special Catch-Up provision and the Age 50+ provision cannot be used in the same calendar year.

What is the “accrued leave deferral option”?

When you retire from the City, you will receive a payout of your unused vacation, sick, and/or overtime hours per the terms in your Memorandum of Understanding (MOU). This payment is referred to as a payout of “accrued leave.” The DCP allows for an eligible amount from this payout to be deferred into your account. You’ll need to complete an Accrued Leave Deferral Option Form and submit it approximately one month before your retirement date. Contact a Local Retirement Counselor to get assistance completing and submitting it at least one month before your retirement date (this process cannot be completed online).

Accrued leave forms received after your retirement date will not be processed.

Where can I learn more about these two provisions?

Contact a Local Retirement Counselor for more information.

May I withdraw money from my DCP account at any time?

Withdrawals from your account may take place only when one of the following occurs:

• You retire, resign, or permanently leave active service with the City.
• You suffer an unforeseeable emergency that causes extreme financial hardship (please refer to the Financial Hardship section).
• You apply for a de minimis withdrawal (to be eligible, your account must be valued at $5,000 or less, you must not have made a contribution in two years, and you must not have received a prior de minimis distribution).

Note: There are no age restrictions or penalties for withdrawals of Before-Tax funds.

What are my distribution options?

After you separate from City service, you are welcome to stay in the DCP for as long as you like. You will continue to benefit from the DCP’s dedicated local service team, expert fund managers, and competitive fees. When you decide to withdraw funds from your account, you have the following options:

• Installment Payment of a Specific Amount – You designate the dollar amount that you wish to receive on a regular installment basis (monthly, quarterly, semiannually, or annually). Payments to you will continue until your account balance is zero. You can change your installment request anytime.
• Installment Payment for Specified Time Period – You will receive payments on a regular installment basis (monthly, quarterly, semi-annually, or annually). Payment amounts depend on the length of time you choose to receive payments, the periodic basis that you choose, and the rate of return on your investment options. Your payment amount is calculated by dividing your current account balance by the number of remaining payments. Your payment is recalculated each time a payment is distributed; therefore, your payment will not be the same amount each time. Your balance will be zero by the end of the term you select. You can change your installment request anytime.
• Full or Partial Lump Sum Distributions – Withdraw all or some of your funds via check or an electronic deposit (ACH) to your checking or savings account.
• Roll over funds to another qualified plan – You can roll some or all of your funds to a 403(b) plan, 457 plan, a traditional IRA, or Roth IRA. Be sure to compare fees and sales charges before you initiate a rollover.

How do I request a distribution?

You can process a distribution request by logging in to your account at LA457.com (Loans & Withdrawals > Summary > Request a Withdrawal). If you have questions about distributions, contact us. For additional information on withdrawals, refer to the Distribution Guide at LA457.com.

Is there an early withdrawal penalty for distributions made before age 59½?

No. Early distribution penalties do not apply to Pre-tax funds in 457 plans. However, withdrawals from your Before-Tax funds will be taxed as ordinary income, and withdrawals from your Roth (after-tax) funds may be subject to taxation on any earnings if distribution requirements are not met. Additionally, any funds rolled into the City’s DCP from an IRA, 401(a), 401(k), 403(b), DROP funds may be subject to a 10% early distribution penalty if withdrawn before age 59½. For more information, contact us.

If I change employment, can I roll over or transfer my DCP account?

Yes, the balance in your DCP account can be rolled over to another governmental 457(b), 401(k), 401(a), or 403(b) plan or to an IRA that accepts rollovers from a 457 plan. You may also leave your account with the City’s DCP and take distributions when you need to or are required to once you reach the mandatory distribution age of 72.

What happens with my withdrawals if I get divorced?

If you have completed divorce proceedings and have a Qualified Domestic Relations Order (QDRO) from a civil court directing a portion of your assets to a former spouse, please contact us or email LA457@lacity.org to provide a copy of your QDRO and determine next steps.

After retiring, can I still withdraw money if I return to work with the City as a part-time employee?

No, this is not permitted under the Internal Revenue Code. For further details, please contact us.

What happens to my account when I pass away?

Upon your death, after your beneficiaries take the necessary steps to claim the account, your designated beneficiaries will receive the full value of their portion of your remaining account balance. Any outstanding loan balances will be treated as taxable income for the decedent. Your beneficiaries have several distribution options available to them. Please refer to our beneficiaries page for more information.

Will the DCP notify my beneficiary upon my death?

It is the responsibility of the beneficiary to notify the DCP and complete the official claim of assets. Certain time limits may apply to beneficiaries, and it may be in the best interest of each participant to make designated beneficiaries aware of DCP information. We recommend you review your beneficiaries on an annual basis to ensure the information is up to date, accurate, and complete.

Can I designate a trust as my beneficiary?

Yes. Be aware that the rules for beneficiary collection as a trust under a 457 plan may differ from rules of other beneficiary types. It may be best to consult a qualified estate planner or legal advisor for more information about designating a trust as your beneficiary.

Can I designate my minor children as beneficiaries?

Before you designate minor children as your primary or contingent beneficiaries, consult a legal advisor for more information on how funds are distributed.

If I’m married, can I designate someone other than my spouse as my primary beneficiary?

Yes, but your spouse will need to consent to permitting his/her community property interest being provided to the non-spouse beneficiary. To designate someone other than your spouse as your primary beneficiary, log into your DCP account (place cursor on [Profile Name] > select "Personal Information" > Beneficiary Information) or complete and submit a Beneficiary Designation Form.