One very convenient benefit of investing with the Deferred Compensation Plans of the State and City of New York is an "in-plan" opportunity to convert amounts from the pre-tax account to the designated Roth account. Insofar as Roth contributions are made on an after-tax basis, the amount converted from the pre-tax account to the designated Roth account is a taxable event. This "in-plan" opportunity is also available to retirees.
Compared to when you are still working, will you be in a lower or higher income-tax bracket during retirement? Your answer will dictate if you should be investing pre-tax or after-tax in a designated Roth account. Taxable Required Minimum Distributions (RMDs) start at 72. Beginning, therefore, at age 72, you will have three definite and reliable sources of retirement income: Pension + Social Security + RMD. (A fourth source of income may be generated from interest, dividends, capital gains, W-2 wages, rental income, another pension or annuity, etc.)
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