Secure Your Future
A subway series and a profitable TDA — what more can anyone want?
Oct 5, 2006 4:49 PM
October is here and New York is feeling good. It looks like there may even be a subway World Series. The three teacher members of the Teachers’ Retirement System Board will argue about who should win, but whoever does, New York City will shine.
Something else that shines in New York City is the tax-deferred annuity program available to TRS members. October is historically TDA month. The TDA is the tax-deferred voluntary retirement savings plan for educators that is permitted under section 403(b) of the Internal Revenue Code.
In the New York City school system, the provider of the program is the TRS. Members participate in this plan at a rate two times as great as in other school districts across the nation. More than 72,000 TRS members have active accounts and more than 31,000 retirees have left their TDA accounts for continued investment with TRS. As of June 30, approximately $13.1 billion was invested. The TDA is one of the largest voluntary defined-contribution programs in the country.
In 2007, members under age 50 will be permitted to contribute up to $15,000 to the TDA. Those age 50 and older can contribute up to $20,000. Members with at least 15 years of service, who have contributed an average of $5,000 or less per year, may contribute up to an additional $3,000 a year in “catch-up” contributions, up to a maximum of $15,000 over their career. That would allow some members to contribute $18,000 or $23,000 in 2007 depending on whether they are older or younger than 50.
Do not be intimidated if you cannot contribute the maximum. You may contribute as little as 1 percent of salary per year. Many members start with small contributions and gradually increase them. The average account of a 21- to 24-year-old member is $3,879, so you see, many people start slowly. The average account of a member age 55 and older is $126,347. As a person’s financial situation changes, contributions increase.
A summary of the TDA investment choices is available at the TRS’ Web site.
New members
In order to participate in the TDA program, you must be an enrolled member of TRS. If you were recently appointed and wish to participate in the TDA, you must file both your TRS Enrollment Form as well as a TDA Enrollment Application.
Alliance for Retired Americans (ARA)
ARA activists gathered in Washington the first week in September to map out a campaign to educate and mobilize Americans around the threats to Social Security and Medicare. Policies adopted include:
- support for national health coverage; about 48 million Americans of all ages have no health insurance;
- strengthening the Supplemental Security Income program, which serves those with low incomes and disabilities — including many of our students and their families; and
- getting out the vote so that pro-Social Security and Medicare senators and representatives are elected.
New federal pension law is poor fit for public plans
The AFT, the UFT’s national affiliate, joined with 27 other public employee unions and public retirement plans this month in urging Congress to reject apples-to-oranges comparisons between private and public sector pensions. The warning is timely since President Bush on Aug. 17 signed a new law ratcheting up funding rules for pensions in the private sector.
The yardsticks in the law were crafted specifically for non-government employers — rules that likely will pressure more private sector employers to jettison high-quality, traditional pensions for their workers.
Already, pressure is building to blur the public-private distinction now that the Pension Reform Act of 2006 is law. As the new private pension law was nearing completion, ranking members of the Senate Finance Committee asked Government Accountability Office investigators to conduct a sweeping study of public pensions, and the coalition quickly pointed out that public and private pensions are not equivalent. There “are fundamental differences between governments and business that result in critical distinctions between plans in each sector and the way in which they are accounted for,” the coalition reminded Congress and the GAO in an Aug. 2 letter.
While private sector plans covered under the Employee Retirement Income Security Act are insured by a federal agency, the Pension Benefit Guarantee Corp., “public plans are backed by the full faith and credit of state and local governments [and accrued benefits] typically are protected by state constitutions, statutes or case law,” noted the coalition.
This is all part of the attack on the middle class and the efforts by ideologues, corporate America and the financial services industry to destroy the defined-benefit pension system.
Another giant, profitable corporation, DuPont, the chemical company, has announced that future employees — those beginning in 2007 or after — would not get pensions and will not get employer help in paying for retiree health insurance.
The UFT will continue its strenuous efforts to see that our members continue to receive Social Security in its current defined-benefit format and our excellent defined-benefit, traditional pension and continue to be able to voluntarily participate in supplemental savings programs like the TDA and the New York City Deferred Compensation Plan. And of course, retiree health insurance, as always, remains a top priority for the union.
“Secure your future” is compiled and written by Mel Aaronson, Sandra March and Mona Romain, teacher-members of the NYC Teachers’ Retirement Board. For further information on items discussed, call your UFT borough office or the TRS. BRONX: 1-718-379-6200; BROOKLYN: 1-718-852-4900; MANHATTAN: 1-212-598-6800; QUEENS: 1-718-275-4400; STATEN ISLAND: 1-718-605-1400; Teachers’ Retirement System: 1-888-8NYC-TRS (692-877).
