If you are a city employee, here’s why you should enroll in the deferred compensation or defined contribution plans available to you.
The deferred compensation program available to city employees can provide a wide variety of benefits for the investor. While not the same as a 401(k) plan, they have several similarities.
One major benefit of these programs is the ability to save for retirement in a tax-deferred fashion. This means that every dollar you put in — which comes from your paycheck — grows tax-deferred.
However, there’s a lot to know about these plans. There are limitations to how much you can contribute annually, and the plan options will vary depending on the “type” of employee you are.
Below, you’ll find helpful information and answers to several frequently asked questions about these types of plans, how they work, and the benefits you’ll receive.
We’re Here to Help Guide City Employees
The Lopez-Marotz-Wright team welcomes you to our dedicated page for city employees. This page contains a wealth of information, including answers to some of the most common questions we receive. We encourage you to bookmark this page for future updates.
Financial Advisor Cynthia Marotz has a special focus on the complex financial options and benefits to which city employees have access. As her husband has worked for the city for 20 years, she has made it her mission to help other city employees navigate these choices. Whether you’re a firefighter, police officer, administrative, or general city employee — we invite you to watch this short video to learn how our team can help you take control of your financial future and maximize your city benefits.
This city employee update introduces Cynthia Marotz, CWS®, CRPS®.
Can I change the amount I defer throughout the year? Would I want to? How much — and in what — should I invest?
In some plans, you can change the amount you are deferring. The more difficult question is deciding the amount you should be investing and how to invest it. We recommend you speak with a financial advisor to go over your situation to help determine the best possible options.
Can I rollover my DROP into the plan?
Usually, the answer is yes, you can. However — you should carefully weigh the options available to you with your financial advisor, as there may be better choices available to you.
Does participating in deferred compensation or defined contribution plans affect my Social Security?
No, it does not. Nor will it affect your pension.
Does my employer give a match?
That depends on which plan you are in!
The City of Lakeland “general employees” plan, for example, has 3 different pension plans which can directly affect your deferred compensation or defined contribution plan. Your date of hire and the type of position you hold determine which plan you will belong to.
Note that Fire and Police employees, potentially, may have completely different benefits and plans depending on the employer and situation.
What happens to my deferred compensation / defined contribution plan when I retire or quit?
This is what it’s all about, right?
Of course, you can leave your money in the plan if you choose. You also have the option of rolling it over to an IRA.
If you are transitioning to a new employer, there are some cases in which you may be able to move the funds to the new employer’s plan.
Finally, you have the option of cashing out the plan. This is usually not recommended due to the implications of taxes and other possible penalties.
As you are reaching retirement age — or if you’re planning on making a career move — the best course of action is to weigh the benefits of each option with your financial advisor.