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

Financial experts tell us that a financially secure retirement depends on four pillars of retirement security:

  • a pension;
  • Social Security;
  • personal savings; and
  • retiree health insurance.

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), you have the third component: It’s an excellent way of saving for an even more secure retirement. Those who retire with more than 10 years of credited service are covered by a retiree health insurance program.

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 contributions until you withdraw them.

No wonder so many members of the TRS and the BERS have taken advantage by enrolling in the TDA program. Since the TRS launched the TDA program in February 1970, total assets have grown to more than $11.3 billion. Today, more than 70,280 in-service members and more than 29,800 retired members have TDA investment accounts. And more than 4,500 retirees are collecting a second retirement check each month from their TDA accounts.

To make investment changes in the TDA program for the first quarter of 2007, the TRS must receive your form by Dec. 1, 2006.

NOTE: Newcomers may join the TDA program at any time as long as they are enrolled members of the TRS. Protect your right to participate in TDA as early as possible by filing a TRS enrollment application.

If you are not appointed, you have the option of joining the BERS and opening a TDA. We recommend that you do.

Another Retirement Savings Plan Available

UFT members now have another tax-favored retirement savings vehicle. In addition to the TDA, you can use the city’s 457 deferred-compensation plan. This plan, available through the city’s Office of Labor Relations, is run by the city with no union input, so far. To get information you must call: 1-212-306-7760 (1-888-327-3113 outside NYC).