Important year-end contribution updates and more.
Make your list and check it twice!
With 2022 coming to a close, and the New Year quickly approaching, there are a few important items you need to be aware of in order to maximize the benefits you receive from your Deferred Compensation Plan (DCP) account. Let’s review what you need to know.
Maximize your contributions and tax breaks for 2022.
There is still time to “max-out” your DCP contributions and potentially reduce your 2022 taxable income. To increase your 2022 contributions before year-end, you must make a change to your contribution amount no later than November 30, 2022 in order for it to take effect for the remaining 2022 paydays. Review the 2022 contribution limits here before making any changes. If you are ready to make a contribution change, log into your DCP account to update your contribution amount.
Roth In-Plan Conversion deadline.
If you have been planning to convert all or a portion of your DCP before-tax funds into after-tax (Roth) funds, you must submit the required forms no later than December 10, 2022. Roth In-plan conversions are not typical and have significant tax implications that you should discuss with your financial and/or tax advisor before making any decisions.
Review 2023 contribution limit increases and save more in the New Year.
As expected, contribution limits have increased for 2023 – quite significantly. For DCP participants, you will be able to save at least $2,000 more in 2023! Additionally, contribution limits for those ages 50+ or those enrolled in Catch-Up have increased. Visit the contributions page for a full breakdown of the 2023 limit increases that can benefit you.
Looking to take advantage of the increases? To ensure any contribution changes you make are effective on your first 2023 paycheck, you will want to update your contribution amount between December 1, 2022 and December 29, 2022 (1:00 p.m. PST).
| Contribution Limits | Annual Limit | Paycheck Amount* |
|---|---|---|
| Below Age 50 | $22,500 | $900 |
| Age 50 or Above** | $30,000 | $1,200 |
| Catch-Up*** | $45,000 | $1,800 |
*This calculation is provided for employees who choose to contribute the maximum annual amount allowed in 25 regular and equal payments throughout the year, but participants can elect bi-weekly contributions in any amount they choose.
**Employees who are age 50 or older, or who will be turning age 50 at any point in the calendar year, are automatically eligible to contribute the higher amount applying to that calendar year.
***Catch-Up is available for participants who are within at least three years of eligible retirement age. It allows these participants to contribute up to twice the Under-Age-50 contribution amount for three consecutive years without penalty. To be eligible, a participant must have an unused balance representing amounts the participant was eligible to but did not contribute in prior years. To learn more, please contact a DCP representative.
Protect your DCP account by registering it online.
With cybersecurity threats becoming more sophisticated by the day, the single most important thing you can do is to claim and register your DCP account online. If you already have a username and password and have logged into your account, you’ve already done this! By registering your account, you will be able to monitor account activity 24-7, set up account alerts, establish beneficiaries, and safeguard account access with a username and password unique to you. To register your DCP account, click here.
If you have any questions about these important updates, feel free to schedule an appointment with a local retirement counselor who can help you understand how these changes impact you. For specific tax-related questions unique to your situation, we recommend consulting with your tax professional.