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November 2005

Tax-Deferred Annuity:
The Smart Road to a Secure Retirement

Financial experts tell us that a financially secure retirement depends on having income from three sources:

  • Social Security.
  • A pension.
  • Personal savings.

As Teachers’ Retirement System (TRS) or Board of Education Retirement System (BERS) members, you are fortunate to have two of those components — Social Security and an excellent pension — as the basis for your retirement. And thanks to the Tax-Deferred Annuity (TDA) Program, there is also a third component: It’s an excellent way of saving for an even more secure retirement.

The TDA is a voluntary program that grows out of Section 403(b) of the Internal Revenue Code. The TDA allows you to save for retirement with pre-tax dollars — thereby lowering your current taxable income — and lets those funds grow on a tax-deferred basis so you don’t have to pay taxes on your savings until you withdraw them.

No wonder so many members of the TRS and BERS have taken advantage by enrolling in the TDA program. Since TRS launched the TDA Program in February 1970, total assets have grown to an estimated $11.4 billion. Today, approximately 68,000 in-service members and more than 29,000 retired members have TDA investment accounts. And approximately 4,100 retirees are collecting a second retirement check each month from their TDA accounts.

NOTE: Newly appointed members must enroll in TRS in order to participate. TDA deductions cannot begin until TRS enrollment is completed. Protect your right to participate in the year 2006 TDA by filing both a Tiers III/IV Enrollment Application (EN10) and TDA Enrollment Form (TD1). You also can enroll in TDA online (see TDA Season is Here).

If you hold a modified temporary license (MTL), you have the option of joining BERS and opening a TDA. We recommend that you do.