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Secure your future
TRS loans, TDA are important in-service system benefits
Last issue, we wrote about two important and valuable benefit protections the Teachers’ Retirement System provides for in-service members: the death benefit and disability retirement benefits. We all hope that no TRS member or family has to use these benefits; however, protection for these events is necessary.
In this issue, we would like to remind you about TRS in-service benefits of a more pleasant nature.
TRS members have available to them two sources of loans. All members have the right to borrow from their Qualified Pension Plan contributions. In-service Tier I/II members may borrow from their Annuity Savings Fund account and Tier III/IV members from their Member Contribution Accumulation Fund account.
Members who participate in the Tax Deferred Annuity program are eligible for loans from their TDA account.
While members are working, loan repayments are deducted from the salary paid and there is little chance that members will fall into arrears on their loan payments.
The maximum amount that can be borrowed from a combination of QPP and TDA loans is $50,000, if there is sufficient money in the accounts.
In the month of October, members took 1,457 QPP loans totaling over $9 million. More than 1,300 members took a total of over $14.5 million in TDA loans.
These loans can be very beneficial because they are fast and simple to obtain and are a private arrangement between the member and the TRS. Complications can arise if a member goes off of payroll for any reason and payments cannot be taken from salary being paid, since payments must be made by sending a check each month to TRS.
Loan brochures for QPP loans are available by tier and a separate brochure for TDA loans is also available. These loan brochures can be requested from the UFT or from TRS. Since borrowing money is a serious financial decision, members should compare TRS loans to loans from other sources and should understand all of the ramifications.
Another favorite in-service benefit enjoyed by members of TRS is the right to participate in the TDA program. This program allows members to put away money in order to provide for a more secure retirement while deferring taxes while working. About two-thirds of all TRS members participate in the TDA program and enjoy deferring current taxation on the money saved in the program. TDA participants may select from among six different easy-to-understand investment choices. Literature is available from TRS and should be carefully studied before participating.
The latest information available shows that 71,480 in-service members are contributing, 38,182 retired members have deferred TDA account balances and 3,566 retirees are collecting a second retirement check each month from the TDA. All together, TRS members have over $15 billion invested in the program.
U.S. Census Bureau news
State and local government defined-benefit employee retirement systems paid $168 billion to 7.5 million retirees and survivors in fiscal year 2007, according to the U.S. Census Bureau.
There were 2,547 retirement systems with memberships of 18.6 million people who could be eligible for benefits in the future.
New York State has eight retirement systems for public employees in the state. Five are in the city. Pennsylvania has more that 900 different retirement systems and Hawaii and Maine each has only one system to serve all public employees.
In fiscal year 2007, receipts totaled $580.5 billion. Most came from earnings on investments: $473.5 billion. Governments contributed $72.9 billion and members $34.1 billion. At the end of the year, investments totaled $3.4 trillion and were held in broadly diversified portfolios of investments.
By this time, all members should have received their Annual Benefit Statement and Quarterly Account Statement and all new members should have received their new member kits. If you have not received yours, contact TRS. See the number at the end of this column.
Winter recess is a good time for members to visit TRS and take care of any pending business. TRS offices are open from 8:30 a.m. to 5 p.m. The offices are closed on Dec. 25 and Jan. 1. As a reminder, TRS offices are also closed on Martin Luther King Day, Jan. 18, and on Presidents Day, Feb. 15.
We take this opportunity to wish you a happy holiday and urge you to get a good, well-deserved rest. The UFT central office will be open on Dec. 28, 29 and 30 to answer phone calls and deal with emergency matters.
“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.