NYS Deferred Compensation and 457(b) Plan Death Benefits for Survivors

The NYS Deferred Compensation Plan Is Separate from NYSLRS

Many New York State and local government employees contribute to both the NYSLRS pension and the New York State Deferred Compensation Plan — a 457(b) voluntary savings plan administered by the state. When a participant dies, their Deferred Compensation account balance is a separate asset from any NYSLRS pension benefit. It has its own beneficiary designation, its own claim process, and its own tax rules.

This is one of the most commonly overlooked assets in a survivor claim. Families focus on the pension — which is the larger, more complex claim — and either forget the 457(b) account exists or assume it is handled automatically alongside the pension. It is not.

Who Gets the 457(b) Account Balance

The balance goes to the beneficiary designated on the participant's Deferred Compensation Plan beneficiary form — not the NYSLRS beneficiary designation. These are two entirely separate systems with separate forms.

The NYS plan's beneficiary record is separate from the NYSLRS beneficiary designation. If no valid designation is on file, the plan applies its default beneficiary rules; contact the administrator to confirm who may claim and whether an estate process is needed.

Spouses and non-spouse beneficiaries may have different options for taking or rolling over the account. The specific choices and deadlines depend on the plan rules and beneficiary's circumstances. Confirm the available options with the plan administrator before requesting a distribution or rollover.

How to File the Claim

Contact the NYS Deferred Compensation Plan directly — not NYSLRS. The plan administrator handles death claims separately from the pension system.

For the New York State plan, contact the NYS Deferred Compensation Plan directly, using the contact details on the participant's official account or most recent plan statement. NYSLRS does not handle this account.

You will need the participant's plan account number (found on quarterly statements or the annual statement), a certified death certificate, and proof of beneficiary status. The plan administrator will provide the specific claim forms.

Local government 457(b) plans may use different administrators — check the participant's statements or contact their former employer's HR department.

Tax Treatment of 457(b) Death Benefits

Tax treatment depends on the account and the distribution selected. Do not apply NYSLRS ordinary-death-benefit exclusions or withholding rules to this separate 457(b) account without confirmation. Ask the plan administrator what tax form and withholding will apply, and consult a tax professional before choosing a distribution.

Coordinating the 457(b) Claim with the Pension Claim

The practical challenge is timing. The NYSLRS pension claim and the Deferred Compensation claim proceed on separate tracks with separate agencies. A family dealing with a retiree's death is simultaneously navigating NYSLRS Survivor Services (for the pension), the Department of Civil Service Employee Benefits Division (for NYSHIP health insurance), the Social Security Administration (for federal survivor benefits), and the NYS Deferred Compensation Plan (for the 457(b)).

The NYSLRS Survivor & Death Benefits Guide includes an agency-by-agency claim coordination timeline for these parallel filings. Contact the Deferred Compensation Plan promptly for its required forms, available distribution options, and any applicable deadlines.

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