Employers' Pensions and Benefits Administration Manual (EPBAM)
   

 

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New Jersey State Employees
Deferred Compensation Plan (NJSEDCP)


  Changes in the Administration of the NJSEDCP  
 
Catch-up
 
   

Provisions for Catch-up 

 
   

Forms Processing

 
 

Additional Information

 
   

Employer Procedures Guide

 
   

Determining Eligibility

 
   

Enrollment

 
   

Emergency

 
   

Death

 
    Distribution  

 


    Changes in the Administration of the New Jersey State Employees Deferred Compensation Plan

    On October 25, 2005, the State Treasury and New Jersey State Employers Deferred Compensation Board announced that Prudential Retirement, a business of New Jersey-based Prudential Fianancial, has been selected as the third party administrator for the New Jersey State Employees Deferred Compensation Plan (NJSEDCP). Because of this upcoming change in the administration of the NJSEDCP, effective January 1, 2006, some of the information provided below may no longer be accurate. The Division of Pensions will provide procedural updates regarding the NJSEDCP as soon as they become available.

Catch-up Provision

The Catch-up Provision allows participants nearing retirement age to increase their maximum annual deferral to as much as $15,000. This may be done if the participant has underutilized deferrals from prior years of participation under the Plan. Underutilized deferrals are defined as the difference between the participantís actual annual deferral amount and the maximum allowable annual deferral amount that has accumulated in the participant's account. Total underutilized deferrals are updated annually and shown on the participantís quarterly statement of account as "Available Catch-up Amount".

A participant in the Plan may enter the catch-up provision for any or all of the three years prior to, but not including, the year retirement becomes effective. The minimum age for entering catch-up is three years before the year that the participant could retire and immediately receive an unreduced retirement benefit. 

For example, the earliest possible retirement age for a PERS employee that would not lead to a reduced pension is an "Early Retirement" at age 55. The first eligible year for this employee to exercise the Catch-up Provision under Deferred Compensation is the year in which he or she reaches age 52.

The participant must also have accumulated underutilized deferral amounts. Catch-up dollars accumulate only if the participant has not deferred the maximum allowable during the years of participation in the Deferred Compensation Plan.

During participation in Catch-up, participants may defer up to a maximum amount of $15,000 per year for any or all of the three years prior to retirement, providing the participant has accumulated a sufficient catch-up dollar amount.

In order to enter into catch-up, the participant must indicate on a "Deferred Compensation Catch-up Election form"  the elected retirement date and the percentage of payroll deferral.  Upon reaching this projected retirement date the participant will no longer be eligible to utilize any remaining catch-up amounts that may remain available. 

The catch-up provision may only be used once. A participant changing a declared retirement date would not be eligible to elect the catch-up provision again.

Processing Change Forms

Balance Transfer forms received in the Deferred Compensation Office are immediately date stamped and reviewed by Plan personnel to determine:

  • If the employee is a plan participant;

  • If the name, Social Security number, payroll center and check distribution code are completed;

  • If the percentage to be deferred is between 2% and 70% (if allowable);

  • If the percentage is in whole numbers (fractions are unacceptable);

  • If the participant has signed and dated the form;

  • If the authorized personnel representative's signature and date signed are present (required for any change, suspension or resumption of payroll deduction, optional on all other changes).

In the case of a change, suspension, or resumption of payroll deductions, or entrance into the catch-up provision, the effective date would normally be the second pay date of the month following the month of receipt in the Deferred Compensation Plan Office. However, if the participant is not under the Stateís Centralized Payroll and the pay center has a payroll schedule that warrants an effective date other than the second pay date of the month, an approved schedule may be determined by the Deferred Compensation office.

In the case of a change in investment election, the effective date would normally be the first pay date of the month following the month of receipt in the Deferred Compensation Plan Office. In the case of transfer of investment balances, the effective date would normally be the last calendar day of the month in which the change form is received.

Any incomplete Balance Transfer submitted to the Plan will be date stamped and returned immediately to the participant's personnel office, unless the participant is retired or otherwise terminated from service with the State, in which case the form is returned directly to the participant. A cover letter stating the reason for rejection will accompany the returned form.

Properly completed or corrected Balance Transfer forms are date stamped and confirmed at the bottom (Balance Transfer Confirmation section) with a Deferred Compensation representativeís signature. The effective date(s) is entered as indicated in each relevant section of the Balance Transfer form by the Deferred Compensation Office. The confirmed forms are then distributed as follows:

  • White Copy: Retained by the Deferred Compensation Section for keypunching, and subsequently filed in the participant's account folder by Social Security number.

  • Green Copy: This copy will be returned to the appropriate Centralized Payroll Office to update the participantís payroll deduction file. If section A of the Balance Transfer form has not been completed, this copy is destroyed, since no payroll deduction is affected.

  • Canary Copy: Returned to the participant's personnel office to be maintained in the payroll or personnel file.

  • Pink Copy: Returned to the participant's personnel office to be forwarded to the participant as a confirmation of the action.

  • Gold Copy: Retained by the participant or personnel office before submission to the Deferred Compensation Office for processing of the form as a record of filing.

  • If the participant is retired or otherwise terminated from service with the State and is filing a Balance Transfer form to transfer balances, the copies will be returned directly to the participant's home address.

     Catch-up Election Form


For more information:

Employer Procedures Guide

Enrollment

Emergency

Death

Distribution

 

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Last Updated: December 6, 2005