Employers' Pensions and Benefits Administration Manual (EPBAM)
   

 

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New Jersey State Employees
Deferred Compensation Plan (NJSEDCP)


 
Death Claims and Procedures
 
   

Death of an Active Participant

 
    Death of Participant Currently Receiving Distributions  
    Federal Tax Implications  
    State Tax Implications  
 
Other Information
 
   
   

Determining Eligibility

 
   

Enrollment Background

 
   

Effective Dates

 
   

Catch-up Provisions

 
   

Emergency Distributions

 
   

Distribution Process and Requirements

 


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.

Death of a Participant

Death of an Active Participant

In the event of the death of an active Plan participant, the Deferred Compensation Office must receive a certified copy of the death certificate as soon as possible to initiate payment of the account. The designated beneficiary(ies) on file with Deferred Compensation will be notified of the options and procedures for filing for account distribution.

If the active participant is older than normal retirement age, the beneficiary must begin account distribution. Account distribution will begin following receipt of the necessary forms, as dictated by the processing cycle, unless otherwise indicated.

In the case of the death of an active participant younger than normal retirement age, the named beneficiary may delay commencement of distribution until the month following what would have represented the original participant's normal retirement age. The beneficiary will be provided with the same options that would have been available to the original participant upon termination of service, retirement, or disability.

Participants may change beneficiaries at any time during Plan participation by filing an updated Deferred Compensation Beneficiary Request form with the Deferred Compensation Office.

Death of Participant Currently Receiving Distributions

Upon notification of the death of a Plan participant receiving distributions from a Deferred Compensation account, the named beneficiary on file with Deferred Compensation will be contacted with the procedures for recommencing account payment. The beneficiary will continue to receive the balance of installments that would have been due to the original participant (unless extenuating circumstances exist).

If the named beneficiary is not a person, for example the participant's estate, the balance of the account will be paid as a lump-sum.

Participants may change beneficiaries at any time during Plan participation by filing an updated Deferred Compensation Beneficiary Request form with the Deferred Compensation Office.

Federal Tax Implications

Contributions into the New Jersey State Employees Deferred Compensation Plan are exempt from federal income tax withholding. All distributions from the Deferred Compensation Plan are deemed to be supplemental wages and, as such, according to Revenue Ruling 82-46, are subject to federal income tax withholding. The Deferred Compensation Plan currently withholds federal income tax based upon information provided to the Plan on Form W-4, Employee’s Withholding Allowance Certificate.

Those receiving distributions from Deferred Compensation will be issued a W-2 for the applicable tax year. Distributions are considered wages for the tax year in which they are received and will be taxed accordingly.

State Tax Implications

The New Jersey State Employees Deferred Compensation Plan will issue, in the appropriate tax year, a W-2 that includes the State taxability of Deferred Compensation distributions. All contributions into the Deferred Compensation Plan have been subject to State taxes. Only the gain portion of the distribution will be included as income for State tax purposes.


For more information:

Employers Procedure Guide

Determining Eligibility

Enrollment Background

Catch-up Provisions

Emergency Distributions

Distribution Process and Requirements

 

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Last Updated: December 6, 2005