A cost-of-living adjustment (COLA) is an annual adjustment applied to your retirement income to reflect changes in the economy (inflation). Most DRS retirement plans offer a COLA, but Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement. View the 2024 COLA percentages by retirement date and plan. When will I receive the 2024 COLA? LEOFF Plan 1 COLAs take effect April 1 and start with April 30 benefit payments. All other DRS Plan COLAs take effect July 1 and start with July 31 benefit payments. You need to be retired by July 1 for at least one year to be eligible for a COLA. Once you’re eligible, you’ll receive any COLA starting with the pension payment issued at the end of July, and every year after. You don’t need to apply to receive the COLA – it’s automatic. How much will the COLA be? The maximum annual COLA you can receive for most DRS plans is 3%. If inflation that year is above 3%, the additional amount is applied to future adjustments (called COLA banking). Any year inflation is lower than 3%, the COLA can pull from banked percentages in prior years. This happens automatically and the adjustment is made for you. You could receive a different adjustment each year, depending on the amount available in your COLA bank. Will PERS 1 and TRS 1 receive a benefit increase? Certain retirees in Plan 1 of the Public Employees’ Retirement System and Plan 1 of the Teachers’ Retirement System (PERS 1 and TRS 1) will receive a one-time benefit increase in July 2024 as a result of House Bill 1985 (pending the governor’s signature). More about COLAs [reblex id='14232']

Washington’s Deferred Compensation Program (DCP) offers a Roth option in addition to the traditional pretax option many customers contribute to. Here we’ll take a look at questions you’ve asked about the newer Roth option, especially in comparison to a Roth IRA. While DCP is available only through employers, an IRA, or Individual Retirement Account, is a type of account you can set up on your own through a financial vendor. What is DCP? A supplemental retirement savings account available to many Washington public employees. More about DCP. If your employer doesn’t offer Washington’s DCP, ask about other available retirement savings accounts. What is Roth?With Roth, your contributions are deferred from your already taxed income. Roth withdrawals, including any investment earnings, are not taxed if you meet minimum qualifications. Tax-free requirements include a five-year holding period from the year of your first contribution, and a minimum age of 59½. If you withdraw before meeting these, any investment earnings will be taxed. [table id=354 /] *Customers age 50 and older can contribute more to DCP annually. See limits. **2024 income limits for Roth IRA: The income phase-out range for taxpayers making contributions to a Roth IRA is between $146,000 and $161,000 for singles and heads of household. For married couples filing jointly, the income phase-out range is between $230,000 and $240,000. Q&A How is DCP Roth different from a Roth IRA? The main difference is Roth IRA has income limits to participate. DCP Roth does not. DCP Roth also has higher maximum annual contribution limits than a Roth IRA. Can I contribute to both DCP Roth and a Roth IRA? Yes. You can contribute to both, and the annual limits for DCP Roth and a Roth IRA are separate. Does my plan (PERS, SERS, TRS etc.) offer a Roth option? No. DRS pension plans are all governmental 401(a) plans, which do not allow Roth contributions. Your pension withdrawals will be federally taxed as income when you receive them.  How do I start DCP Roth contributions? Existing DCP customers can add Roth through your DCP account. Select your DCP account, manage contributions, update my contributions. Here you can enter pretax or Roth contributions. Or you can contact Voya at 888-327-5596 for assistance. New customers can enroll in DCP by completing this form. Have more questions about DCP Roth? See more about Roth and pretax options. If you have additional questions, we recommend you consult your financial advisor to determine your retirement planning needs. DRS and the record keeper, Voya, are unable to offer financial advice.

In May, you might notice that the timing for your Deferred Compensation Program (DCP) contribution changes are happening sooner. SECURE Act 2.0 of 2022, part of the Consolidated Appropriations Act (CAA) of 2023, builds on and expands the SECURE Act of 2019 to improve retirement savings opportunities. Before this option was added, contribution updates took place on the first of the month following the month they were requested. Now, both new and established participants can have their contribution updates to existing elections take place as soon as administratively possible. However, keep in mind your contributions are dependent on your employer’s payroll calendar. When you request a contribution change, it will happen as soon as your employer can make it happen. If you have any questions, please contact your employer.

Once you’ve reached the required age and years of service for your plan, you can apply for your pension retirement through DRS. We have a complete retirement checklist as well as seminars to guide you through the retirement process, but basically it goes like this: 1. Make sure you qualify for retirement. Do you meet the age requirements? Do you have the number of service years needed for your plan? See your plan page for age and service requirements. This is also a great time to run a quick estimate of the retirement income you’ll receive by using the benefit estimator tool in your online account. 2. Request an official benefit estimate from DRS 3 to 12 months prior to your retirement date. Make this request through your online account or by contacting us. In most cases, we will provide your estimate 5 to 8 weeks before your retirement date.  If you haven’t received your requested estimate within 5 weeks of your retirement date, contact us. Estimates are prioritized by retirement date, which allows DRS to use the most recent information available for you and gives you ample time to submit your retirement application. An official benefit estimate is not the same as the benefit estimator tool available to all customers. However, the dollar amounts you preview in both estimates will likely be similar. To assist your retirement planning any time before or after requesting your official benefit, you can use the benefit estimator tool through your online account. 3. Complete a retirement application at least 5 weeks from the date you intend to retire (once you receive your official estimate). Complete the application online or request a paper form. At any point in your retirement journey, you are welcome to attend a free nearing retirement seminar, hosted by DRS. Consider your DCP income If you have a DCP account, you will need to withdraw these funds separately when you are ready. You can complete this withdrawal online or contact the DRS record keeper, Voya Financial at 888-327-5596. See DCP withdrawals for more. If you are Plan 1 or Plan 2, that’s it! If you are Plan 3, you’ll have completed your pension retirement, but you have one more source of retirement income to consider: Your investment account. Plan 3 has two accounts If you are in Plan 3 you have two sources of retirement income: The investment account you contribute to throughout your career. Your employer-funded pension account. Plan 3 members access these income sources separately. This means you will submit two separate requests for collecting the funds in retirement. You’ll have your pension retirement application you complete with DRS (step 3 above), and you’ll set up withdrawal for your investment funds. Here is the convenient part about having two Plan 3 accounts – You don’t have to collect this retirement income at the same time. You can choose to postpone receiving either. When you reach age 73, the IRS requires you to begin withdrawing funds from your investment account—otherwise, the timeline is up to you. Customers sometimes access retirement contributions from their investment account and delay submitting for the pension retirement—usually to start the pension income when they reach full retirement age, or to start an early retirement with an unreduced pension. See this two-minute video about delaying retirement. Plan 3 customers also have the option to purchase the TAP Annuity using their Plan 3 investment account. The time it takes to access your Plan 3 investment money can vary depending on where your contributions are invested. Find out more about withdrawing from your plan on your plan guide page. [reblex id='14232']