It’s never too early to start thinking about your retirement income and preparing for the future. The UFT’s four pillars of retirement security are a defined-benefit pension, Social Security, health insurance and the Tax-Deferred Annuity (TDA) program and/or the recently introduced Roth option.
All members of the Teachers’ Retirement System (TRS) and the Board of Education Retirement System (BERS) participate in the Qualified Pension Plan, a defined-benefit plan that guarantees a specific benefit at retirement. The Tax-Deferred Annuity program and the Roth option are voluntary defined-contribution plans that supplement your pension or retirement allowance. Your TDA and/or Roth option are funded exclusively through your own contributions.
How the TDA works
The TDA program is a simple and powerful way to save additional money for your retirement. New members can take advantage of the TDA program associated with their pension system immediately. Existing members who are not yet participants can join at any time.
Deposits in your TDA are deducted automatically from your paycheck. The contribution limit is $24,500 per year for members who are younger than age 50. Members ages 50 to 59 may contribute up to $32,500 annually; members ages 60 to 63 may contribute up to $35,750, but contributions by members age 64 or older are capped at $32,500. By investing part of your paycheck — even a small percentage — in a TDA, you take an important step toward funding your retirement years.
Deposits are made on a tax-deferred basis, which means you do not pay federal taxes on your contributions or earnings until you withdraw funds at the appropriate age. New York State and New York City also defer state and city income taxes on TDA contributions, as well as the earnings those contributions generate.
Because the program is intended for retirement, early withdrawals before retirement may be subject to taxes and penalties. But you do have the option of taking out a TDA loan after one year of participation in the program.
How to enroll
You can enroll quickly and securely on the TRS website or the BERS website. You choose a percentage of your pay to contribute and designate how your contributions will be invested.
TRS offers a number of investment options, called Passport Funds, and TRS members may invest in any or all of these funds. The Fixed Rate of Return Fund offers a 7% rate of return, set by New York State. The six other investment options are called “variable return” options because the values fluctuate monthly.
Members of BERS have two investment choices: the Fixed Return Fund and the Diversified Equity Fund.
You should also designate a beneficiary or beneficiaries and always keep those designations up to date.
You can learn more at TDA workshops by the UFT Pension Department.
How the Roth option works
In 2026, the TRS introduced a Roth option in addition to its TDA program. You can enroll in the Roth option on the TRS or BERS websites. The investment options are the same as those for the TDA. However, unlike a TDA account, which allows you to defer taxes by reducing your taxable income now and paying taxes when you withdraw funds, a Roth option offers no upfront tax break. Instead, withdrawals in retirement are generally tax-free.
If a TRS member already has a TDA account, the new Roth option does not affect their current TDA participation. But members now have the choice of investing their savings in the Roth option, the traditional TDA option, or some combination of the two. Members are responsible for managing their combined contribution levels. The contribution limits outlined above apply to the TDA alone, the Roth option alone, or a combination of the two.
This column is compiled by Tom Brown, Victoria Lee and Christina McGrath, teacher-members of the New York City Teachers’ Retirement Board.