With this first column of 2014, we wish you a healthy, happy new year.

It is now a couple of weeks past the Jan. 1 date when people typically make New Year’s resolutions. But you may find it interesting that a recent study showed that 54 percent of the New Year’s resolutions made by Americans concern finances. The top three are:

• To save more.
• To pay off debt.
• To spend less.

A new year also marks a good time to consider the benefits we receive from the Teachers’ Retirement System. All of us look forward to enjoying a financially secure retirement after a satisfying career of educating the children of New York City. From what our retired members tell us, our retirement system makes that goal “a layup” — in basketball parlance, an easy score.

But not all TRS members are aware of the protections and benefits they enjoy from the system.

For members who are still working, the benefits include:

• The right to contribute to a tax-favored supplementary savings plan called the Tax-Deferred Annuity or TDA.
• The security of having two forms of disability retirement benefits.
• A form of life insurance known as the death benefit.
• Loan privileges from the members’ retirement system accounts.

After retirement, you will receive a monthly retirement allowance, health insurance, Welfare Fund benefits and, for the 70 percent of retirement system members who participate in the TDA program, a lump sum of money.

In this and future columns, we will review each of the above for you. We’ll start with the death benefit for members still working.

Death benefits for in-service members

This benefit is available to the vast majority of members — those in Tiers II, IV and VI, or all members who joined or rejoined the retirement system after June 30, 1973.

It is a very significant benefit payable to your designated beneficiaries or estate in the event that you pass away before retirement.

To ensure that your loved ones receive this benefit, it is of utmost importance that you have on file with the TRS an up-to-date designation of beneficiary form for both the Qualified Pension Plan and the Tax-Deferred Annuity.

If you have no beneficiaries listed or your beneficiary designations are outdated, you might leave your loved ones with legal and tax problems that could easily have been avoided.

The retirement system reminds you five times a year in Quarterly Account Statements (QAS) and an Annual Beneficiary Statement (ABS) who you have listed as beneficiaries. You can also check online by accessing your account statements on the TRS website at www.trsnyc.org.

The amount of the death benefit

When a member passes away while in service, the designated beneficiaries receive all of the money in the member’s Annuity Saving Fund (for Tier II members), the Contribution Accumulation Fund and the Annuity Savings Accumulation Fund (Tiers IV and VI).

Beneficiaries also receive an additional benefit based on the member’s years of credited service. One year of completed service brings a benefit equal to one year of current salary, two years of service brings two years’ salary and three or more years of service garners three years’ salary.

A member earning the maximum salary under our contract would leave a benefit of more than $300,000.

We hope you see how valuable this benefit is and that you will make sure that your beneficiary forms are up to date.

As a member grows older and builds other assets, the death benefit begins to diminish. If an in-service member is 61 at the time of death, the benefit is reduced to 95 percent of the amount otherwise payable, 90 percent upon reaching age 62 and so on. The benefit does not go below 50 percent while a person is in service.

The death benefit continues into retirement. When a member who has been retired three years or more passes away, the beneficiaries receive a benefit equal to 10 percent of three years’ of the member’s salary.

In addition to the death benefits available from the TRS, there may also be benefits from the UFT Welfare Fund and from the Department of Education.

Plan ahead

You may wish to consult a knowledgeable tax professional or estate attorney to decide the wisest manner of incorporating your TRS death benefit into your estate planning. You may also wish to consider the benefit in gauging your life insurance needs.

Check that your beneficiary designation forms are up to date. If they are not, file new forms immediately. You may designate new beneficiaries online. However, you must set up a username and password in order to do so.

In future columns, we will discuss disability retirement, the TDA and loans from retirement system accounts.