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Current Pension Topics
A.: You sure can. The Deferred Compensation Board (DCB) of the City of New York sponsors a pre-tax 457 and 401(k) Plan as well as an after-tax Roth 401(k) Plan. Additionally, it offers a pre-tax IRA. You will be rolling over your pre-tax IRA with Fidelity to the pre-tax IRA sponsored by the DCB. This Program is called: New York City Employee Individual Retirement Account (NYCE IRA). You first need to open up a NYCE IRA. After that is done you need to instruct your current IRA custodian (Fidelity Investments) to make the IRA distribution check payable to NYCE IRA for your benefit. The check should be mailed directly by Fidelity to: NYCE IRA, P.O. Box 11151A, New York, NY 10286-1151. Note: Make sure the check is not made payable to you. If it is, the amount will be for just $80,000 with $20,000 set aside for income tax. You want the entire $100,000 to be re-invested on a tax-deferred basis. The needed forms may be ordered/downloaded at: http://nyc.gov/html/olr/html/nyceira/nyceira_home.shtml . Direct the NYCE IRA Administrator to invest the entire $100,000 in the appropriate Pre-Arranged Portfolio. In a recent period of 24 hours my office received four complaints on the same abusive issue: The skilled trades people employed by the City University of New York four-year colleges being locked out of the Deferred Compensation 457(b) and 401(k) Plan of the City of New York. This lock-out is more than 20 years old. That would be okay if these workers had another comparable plan, which they do not. If they want to invest on a salary-reduction basis, they are forced to do business with Metropolitan Life and pay 200-300 basis points (2-3 percent) for an investment that is offered by Deferred Comp for 24 basis points (0.24 percent). Such gouging is perpetually unacceptable. Having said that, about five years ago I spoke with a senior official at CUNY who told me he is "working on it" and inasmuch as he is new to the job it may take a little bit longer than he would like to correct the inequity. How much longer should these workers wait? Another five years? Give me a break! The skilled trades people that are employed at the CUNY two-year colleges have had no such problem because they are paid on a city payroll while skilled trades people employed at the four-year colleges are paid on a state payroll. Well, if they are paid on a state payroll, why are they also locked out of the state's Deferred Compensation Plan? This does not make any sense whatsoever. Why is it that the Payroll System has no difficulty in making deductions for the withholding of Social Security tax, income tax, child support payments, alimony payments, etc; but when it comes to Deferred Comp, the Payroll System says: "no can do"? All city employees are entitled to contribute to a no-load pre-tax retirement savings program. No single group of workers, no matter how small, should be compelled to pay into a 2-3 percent plan. Again, give me a break! I suggest that DC 37 file an unfair labor practice claim with the city Office of Collective Bargaining on behalf of the skilled trades people at CUNY'S 4-year colleges. In protest, I would immediately stop my contributions to this high-cost 403(b) investment product of Metropolitan Life in favor of contributing the maximum I can afford to a Traditional or Roth IRA. Make sure you invest in a no-load mutual fund. Write a letter to the President of the college where you are employed informing him/her of your disgust. Additionally and immediately, I would effectuate a direct transfer under Revenue Ruling 90-24 of my 403(b) account balance with Metropolitan Life to a no-load mutual fund like those offered by The Vanguard Group. | |||||
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