The information on this page is specific to the City of San José PTC Plan. For information about the voluntary Deferred Compensation Plan, retirement savings in general or how to contact us, please visit the other sections on this website.
General Information:
Certain City employees are required to participate in the City of San José PTC Deferred Compensation Plan, specifically:
- Part-time employees
- Temporary employees
- Contract employees
- City Council members or Council Assistants (who are not members of a City retirement plan other than an eligible 457 deferred compensation plan)
The PTC Plan is an alternative to Social Security coverage as permitted by the federal Omnibus Budget Reconciliation Act of 1990 (“OBRA”). As a result of participating in the PTC Plan, you are not subject to the Old Age, Survivors and Disability Income (also known as Social Security) portion of FICA tax on the compensation you defer under the Plan. You are subject to the Medicare portion of FICA.
For more information about the PTC Plan, please view the San José PTC Plan Document and Participant Information Booklet.
Enrollment
Employees enroll in the Plan by completing a written participation agreement authorizing the 3.75% compensation deferral into the Plan. Participation is immediate upon hire or rehire and contributions are deducted beginning with your first pay date.
Mandatory Contributions
Contributions under the PTC Plan cannot be less than 7.5% each year. Under the Plan both you and the City make contributions. You are required to contribute 3.75% of your gross compensation per pay period to the Plan (“mandatory contributions”). The City of San José will also contribute an amount equal to 3.75% of your gross compensation each pay period. Other than your required contributions and the City’s matching contributions, no additional contributions can be made under the Plan.
Your contributions are made on a tax-deferred basis. This means that your contributions are not subject to Federal or State income tax at the time they are invested in the Plan. You will be taxed on the value of your contributions (including any earnings) when you receive a distribution of your benefits from the Plan.
Unless your employment status changes, you may not stop or reduce mandatory contributions to the Plan
Investment Information
The PTC Plan is an alternative to Social Security coverage as permitted by the federal Omnibus Budget Reconciliation Act of 1990 (“OBRA”).OBRA limits the investment choices under the PTC Plan to options that provide for a fixed rate of return. When you enroll in the Plan, your contributions are automatically invested in the Stable Value Option. You may not transfer your account balance out of the Stable Value Fund.
Stable Value Information Sheet
The interest crediting rate for the Stable Value Option (#9906) is determined quarterly but will offer a minimum guaranteed rate of 0.00%. Guarantees are based on the claims-paying ability of Voya Retirement Insurance and Annuity Company and do not apply to the investment return or principal value of the variable investment options.
Payment Options
When you are entitled to a distribution of benefits under the Plan, you have the choice from a variety of payout options*. These include:
- Distribution over your lifetime.
- Distribution over your lifetime and the lifetime of your designated beneficiary.
- Distribution over a set period, not extending beyond your life expectancy.
- Distribution over a set period of time, not extending beyond the joint and last survivor life expectancy of both you and your designated beneficiary.
- Systematic withdrawal of your account over a specified period, or of a specified amount.
- Lump sum, or partial lump sum distribution, in combination with other options.
- Transfer of all or a portion of your benefits to another eligible 457(b) Deferred Compensation Plan.
- Rollover your benefits into another employer-sponsored or eligible retirement plan (an eligible retirement plan is a 401 qualified plan, a 403(b) tax deferred annuity program, or another governmental 457(b) deferred compensation plan).
- Rollover your benefits into an IRA
* Some options require a minimum account balance
Estate Conservation Option (ECO)
This option will provide you with the Required Minimum Distribution (RMD) Amount determined according to Internal Revenue Service (IRS) requirements. Annual amounts are calculated by dividing your previous December 31 account value by a life expectancy factor. The life expectancy factor is determined by IRS tables and may be based on your life expectancy or the joint life expectancies of you and your designated beneficiary. Joint life expectancy results in smaller distributions and benefits are spread over a longer time.
- ECO can only be elected if you are at least age 73 and retired.
- The minimum account cash value to elect ECO is $5000.
- Payments are made annually.
- Payments are recalculated each year by IRS tables, unless otherwise required by law.
We are not responsible for calculating minimum distributions in the year amounts are rolled to us.
Taxation
Amounts distributed directly to you from the plan will only be taxable to you when actually paid, will be reported on IRS Form 1099R, and will be subject to 20% federal tax withholding (to the extent that the distribution is rollover eligible). 457(b) plan benefits are not subject to the IRS 10% premature penalty, even if distributed prior to attaining age 59½. Distributions from the Plan can be rolled into a traditional IRA or an eligible retirement plan, such as a 401(a), 401(k), 403(b), or other governmental 457(b) plan.
Divorce
In the event of your divorce, the court may issue a domestic relations order that addresses the split of your account and the payment of a portion of your benefits to an alternate payee. Voya® will review your domestic relations order to determine whether it satisfies the Plan and IRS requirements for a Qualified Domestic Relations Order. If it does, and the alternate payee is your former spouse, he or she is entitled to elect immediate distribution of the amounts awarded under the QDRO. A spousal alternate payee is also eligible to rollover amounts awarded to another eligible retirement plan in which he or she participates. Please review the Human Resources Divorce Information document before initiating the process.
To obtain additional information, including the paperwork Voya® will need from the City, please contact Service Center.
Group annuities are intended as long-term investments designed for retirement purposes. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits.