Active Participants: Here's your DCP Summer Checklist!
As an active participant in the City of Los Angeles Deferred Compensation Plan (DCP), it's important to stay on top of key aspects related to your retirement savings. This summer, make sure you address important tasks such as being aware of important changes to the HRP system, understanding DCP changes resulting from the SECURE 2.0 Act, prioritizing cybersecurity, and registering for the next Money Matters Session on July 19. Let's dive into each topic in detail:
Be aware of the upcoming Human Resources and Payroll (HRP) system update impacting DCP contributions
Phase 2 of the new HRP system (Workday) is scheduled for implementation at the end of December 2023, which will impact how you review your payslips and your DCP contributions. Prior to December, be sure to review your contributions to ensure it’s set at your desired amount. Login to your account at LA457.com or contact the Service Center at 844-523-2457 and verify that your contribution elections align with your current payslips. Continue to review your account after the transition to ensure your contributions are not disrupted. Participants are responsible for updating and maintaining their contributions.
Stay informed about SECURE 2.0 Act changes to the DCP!
SECURE 2.0 is comprised of ninety-two provisions intended to bolster retirement savings and security. Two provisions to be aware of is the elimination of the “first-of-the-month” requirement for contribution changes and a future change to age 50+ contributions for high earning participants.
Elimination of the first-of-the-month contribution change requirement
Currently, contribution changes must be made prior to the first day of the month the contribution change is taking place. For example, a contribution change for a paycheck in June must be made before May 31. This is known as the "first-of-the-month" rule and was set in place by the IRS.
A SECURE 2.0 provision allows participants’ contribution elections to be effective in the same month the compensation is available to the participant, thus eliminating the "first-of-the-month" rule. For example, a participant may request a contribution change for a paycheck in June in the same month as long as it is made within an appropriate processing time frame prior to the paycheck. We are currently working on making this change effective; communication will be provided to DCP participants once this feature is operational.
Contribution changes for high-earning participants age 50+
Participants above the age of 50 have a higher annual contribution limit than the normal limit, as determined by the IRS. The higher limit is automatically applied in the year that you turn age 50 and may be deferred as either pre-tax or after-tax (Roth) contributions. In 2023, the normal annual contribution limit is $22,500 and the age 50 limit is an additional $7,500.
Under SECURE 2.0, participants whose wages exceed $145,000 in the prior calendar year (adjusted annually for cost-of-living in increments of $5,000) must make their additional age 50 contributions on an after-tax (Roth) basis only. The after-tax (Roth) requirement only applies to contributions above the normal IRS contribution limit.
The retirement industry is seeking further guidance from Congress and the U.S. Treasury Department regarding the implementation of this new provision. The provision may potentially be delayed from its initial effective date of 2024.
As additional provisions of the SECURE 2.0 Act are phased in, stay up-to-date by visiting the DCP’s SECURE 2.0 Act homepage.
Get familiar with Cybersecurity best practices:
Keeping your financial accounts protected is a top priority in today's digital world and protecting your DCP account is crucial to safeguarding your retirement savings. Here are some reminders and industry best practices to follow:
Register your DCP account online: Establish a unique username and password at LA457.com. Please also regularly check your recent transactions to help identify any unusual activity.
Use strong, unique Passwords: Create complex passwords and avoid using the same password across multiple platforms. Consider using a password manager to securely store your passwords.
Multi-Factor Authentication (MFA): In an ongoing effort to provide enhanced protection for your DCP account, you may notice that upon logging into your account from your desktop computer or through the mobile app, you will receive a one-time passcode sent to your mobile phone number to authenticate that the correct person has logged in. This is known as Multi-Factor Authentication (MFA). If no mobile number is on file for your account, you will be prompted to provide one.
Be wary of phishing attempts: Be cautious of suspicious emails, messages, or phone calls asking for your personal information or login credentials. Avoid clicking on unfamiliar links and only provide sensitive information on trusted and secure websites.
REMINDER: Note that the DCP will never ask you to withdraw and/or transfer funds to an external account for any reason. If you detect any suspicious activity or receive any suspected fraudulent text messages, emails, or phone calls, please immediately notify us at LA457@lacity.org or by calling our Service Center at 844-523-2457.
For more detailed guidance on cybersecurity, consult reputable sources such as the US Department of Labor’s Online Security Tips (Online Security Tips (dol.gov).
Register for July Money Matters Session:
Join us for the next Money Matters session on July 19 at 12:00 p.m. to learn about how to use the Retirement Calculator feature in your account. Come join us and learn about the helpful Retirement Calculator! Register here.
This summer, make sure to prioritize these key tasks that will help keep your DCP account safe, secure, and working hard for you. Stay informed about the changes to the HRP system and future implementation of SECURE 2.0 Act provisions, and be sure to update your account beneficiaries, adopt cybersecurity best practices, and register for the upcoming August Money Matters session. By checking off these items from your summer checklist, you can feel good about enjoying the moments this summer that matter most.