Unlocking Investment Potential:
The New York State
Deferred Compensation PCRA Option

As New York State employees prepare for retirement, the importance of having a diversified investment strategy cannot be overstated. One option that many may not be aware of is the Personal Choice Retirement Account (PCRA) offered through the New York State Deferred Compensation Plan. This unique feature allows participants to take charge of their retirement investments by moving a portion of their funds into a self-directed brokerage account. In this blog, we will delve into the benefits of the PCRA, its tax treatment, and why it might be the right choice for you.

What is the PCRA?

The PCRA is a self-directed brokerage account that allows participants in the New York State Deferred Compensation Plan to invest up to 50% of their account balance in a broader range of investment options beyond the standard menu. Instead of being limited to the predefined investment choices offered in the deferred compensation plan, participants can choose individual stocks, bonds, Exchange Traded Funds (ETF’s), and mutual funds, providing them with a greater degree of flexibility and control.

Why Consider a PCRA?

1. Increased Investment Options: One of the most compelling reasons to consider the PCRA is the expanded universe of investment choices. While the traditional deferred compensation menu may offer a selection of mutual funds and target-date funds, the PCRA allows you to explore a much wider array of investment vehicles. This can be particularly beneficial if you have specific industries or sectors you believe will perform well.
2. Active Management: The PCRA offers the opportunity to work with an investment advisor, such as SIA (Strategic Investment Advisors). Active management can play a crucial role as you approach retirement, allowing for tailored strategies that align with your financial goals. An advisor can help you navigate market fluctuations and make informed decisions, providing peace of mind as you transition into retirement.
3. Retirement Plan Money: It’s important to note that moving funds into the PCRA does not mean leaving the 457(b) plan. The money remains within a retirement account, preserving its tax-advantaged status. This means that you can still enjoy the benefits of tax-deferred growth while having the flexibility to invest as you see fit.
4. Accessibility: Unlike other retirement options that may require you to reach a certain age, such as 59 ½, the PCRA does not impose this restriction. This means that even younger participants can take advantage of this opportunity to diversify their investments without worrying about penalties.

Preparing for Retirement

As you approach retirement, having a diversified investment portfolio is crucial. The PCRA not only allows for a broader range of investment options, but it also enables you to implement an active management strategy. Working with an investment advisor can help you create a tailored plan that accounts for your unique financial situation, risk tolerance, and retirement goals.

For instance, if you’re nearing retirement age, your investment strategy may shift towards more conservative options to preserve capital. An advisor can help you navigate these changes, ensuring that your portfolio is well positioned to meet your needs when you retire.

The Underutilized Option

Despite its advantages, the PCRA is not widely advertised, and many NYS employees are unaware of this opportunity. In many cases, I encounter prospects who have never heard of the PCRA or the benefits it can offer. By educating yourself about this option, you can take proactive steps to enhance your retirement planning strategy.

Call to Action

If you are currently participating in the New York State Deferred Compensation Plan and are interested in exploring the PCRA, I encourage you to reach out to me for more information. Understanding how to effectively utilize this option can significantly impact your retirement savings and overall financial well-being.

Contact us today to schedule a consultation. We can help you navigate the PCRA, discuss your investment goals, and develop a tailored strategy that aligns with your retirement aspirations. Don’t leave your retirement to chance—take control of your financial future now!