Many of you may not be aware that you have an alternative to traditonal investment plans. The plan, called the State of Washington Deferred Compensation Program (DCP), is available to all employees of a school district.

DCP allows you to set aside pre-tax contributions each month similar to a Tax Sheltered Annuity (TSA). DCP, however, is managed by the state and does not have the typical charges that employees might encounter under a traditional TSA.

Depending on your tax bracket, it may be possible for you to contribute to a DCP plan without substantially reducing your take-home pay; in some cases, your take-home pay may actually increase. That's because your contribution reduces the income tax on which your income tax deduction is calculated, so your reduction in income tax may substantially offset the deduction for your DCP. Contributions grow tax-free in your DCP account until your withdraw them, presumably at retirement when you're in a lower tax bracket.

You may also become eligible for a credit on your federal income taxes equal to a percentage of the first6 $2,000 you invest in a DCP. The credit is available if your adjusted gross income tax does not exceed $50,000 (if you are married and filing jointly) or $25,000 (if you file a single return).

The base contribution to DCP plans is $15,500, which is also the base annual contribution to TSA plans. Higher amounts can be contributed to TSA plans. Higher amounts can be contributed which are based on your years of service and salary level. The two plans (DCP and TSA) are treated separately by the IRS, meaning that the annual base contribution for both plans combined is $31,000.

The Washington State DCP has 11 investment opitons from which to choose. Contributions are automatically deducted from your paycheck and may be started, stopped, or changed at any time. Although it's a state plan, you are always 100% vested inthe program and have the decision as to what to do with your funds when you separate from employment.

Upon separation of service, either voluntarily or thorugh retirement, you are eligible to receive payment from yoru DCP account. In tehevent of your death, your benefiticiaries will receive payment.

You may withdraw form the account while still employed should you suffer a hardship situation, or in the absence of ahardship, under certain other limited conditions.

For more information or an application form, go to the DCP website .