Secure Your Future
As school year ends, thoughts of retiring begin
Jun 7, 2007 5:21 PM
The school year is quickly drawing to an end. You have helped to educate more than 1 million students and have earned another year of pension credit. At this writing, the Legislature is still in session and has not acted on any of our legislative goals. We will get the word out if important legislation is passed after we go to print.
The most common period for retirement is between July 1 and the end of summer programs. Members who are retiring this year should have participated in the Ready-or-Not program, attended the pension clinic and had a final pension consultation. These services should have informed you and helped you decide upon such important issues as:
• taking an option or taking a maximum retirement allowance;
• removing a lump sum of money from the Qualified Pension Plan (QPP); and
• for Tier I and II members, investing the Annuity Savings Fund (ASF) and Increased-Take-Home-Pay (ITHP) in the fixed or variable annuity.
TDA
At retirement, you must also make a decision about your tax-deferred annuity account. More than 70 percent of retirement-eligible members have TDA accounts. For most of these members, the TDA account balance is the largest lump-sum monetary asset they own.
What to do with the TDA account is one of the most important decisions a retiring member must make. There are a few choices that should be studied and considered before retirement. One is, should you remove the money from the Teachers’ Retirement System and do something else with it? Spend it? Reinvest it with another investment entity? You must study the tax consequences and investment choices before you remove any money.
Another choice is to continue to invest the money with the TRS. This is the decision the vast majority of retirees make. If you make this choice, you can set up a TDA deferral account. You direct the investments in this account the same as you did when you worked. You name the beneficiary or beneficiaries you wish to receive the account balance at the end of your life. You may make withdrawals from the account at any time. You may take loans from the account.
You must begin taking required minimum distributions (RMD) as required by the Internal Revenue Service. A great advantage of TDA deferral is that you now have time to study at your leisure the final disposition of this important asset.
As an alternative to a TDA deferral account, you can use the money left at TRS to purchase an annuity, which is a lifetime stream of payments. This is paid to you in the form of a second retirement check each month. If you annuitize your funds, you give up the right to the lump sum in exchange for a lifetime of monthly checks. You may elect an option to protect your beneficiary(ies). More than 4,000 TRS retirees opt for this benefit.
If you choose to withdraw and roll over your funds, you may wish to consider the city’s Deferred Compensation Plan, which runs accounts that you may wish to invest in. For information on this plan call 1-212-306-7660, or 1-888-327-3113 outside of New York City.
Summer pension services
The UFT will have pension advisors available for telephone inquires from 10 a.m. to 5 p.m. Mondays through Thursdays and 10 a.m. to 4 p.m. on Fridays at 1-212-777-7500 or 1-212-598-6866. In-person pension consultations will only be available in cases that need immediate attention such as members seeking disability retirement. In-person consultations will begin again in the fall.
TRS summer office hours are weekdays from 8:30 a.m. to 5 p.m. TRS’ address is 55 Water Street, New York, NY 10041. The phone number is 1-888-8-NYCTRS.
Chicago pension setback
In the ever shrinking world of defined benefit (DB) traditional pension plans, we are sad to report that the Archdiocese of Chicago is freezing its pension plan. It will instead start making contributions to its 403(b) TDA plan. The TDA plan, instead of being a supplement to a DB plan like ours is, will now replace it.
Summer pension clinics
If you are within two to three years of retirement, you should use some of your time off this summer to plan for the rest of your life. See the accompanying box for information about dates, times and location. No registration is required.
We wish you a well-earned, peaceful and restful summer, secure in the knowledge that you are covered by the four pillars of retirement security:
• a guaranteed pension;
• Social Security;
• a supplemental retirement fund — TDA; and
• a comprehensive health insurance and Welfare Fund program.
For those of you retiring, please accept our thanks for all you have done to educate the children of the City of New York. Our best wishes for a healthy, happy, lengthy and financially secure retirement. We hope that you will use some of your well-earned spare time to stay involved through our Retired Teachers’ Chapter.
For those of you who will be returning, we look forward to keeping you informed again this fall.
TRS tidbits
TDA investment elections can be changed in August. The election change form must reach the TRS by Sept. 1. Changes may also be made in August on the TRS’ Web site at www.trs.nyc.ny.us. Changes will begin in October.
2007 Annual Benefit Statement — The ABS for the period ending June 30 will be sent to members’ homes early in the new school year. Make sure the TRS has your current home address. You will be provided with your account balances and credited service. For many members qualified to retire or near retirement eligibility, the ABS will include estimates of retirement allowances.
“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), www.trs.nyc.ny.us.
