Solution by Richteacher: Pay Yourself First by contributing to a tax-deferred annuity (TDA) and save some of your income before you spend it or pay tax on it. We have not said it loudly enough, but the UFT have urged teachers to participate in the TDA program for years: Those who has done so are getting rich,others may wind up in the poor house.

RichTeacher urges you to:

1-Maximize up to 20% of your current salary into a Fixed TDA program.

2-Pre-qualify for a mortgage and buy your first home as soon as possible

3-Start your own business and register a LLC or a Corporation

4-Join Richteacher.net and Learn to Get Rich.

TDA investment choices

The TDA has three investment choices available.They are the Fixed Annuity Program, the Variable Annuity A Program and the Variable Annuity B Program.  These choices are independent of one another and can be changed quarterly. Investment choice changes for the calendar quarter beginning Jan. 1 must be made by Dec. 1. You may make the changes on the TRS’ Web site, www.trs.nyc.ny.us, if you have full access, or by filing a “TDA Investment Election Change Form” (TD45).

Fixed Annuity — This program offers contributors a guaranteed crediting rate of 8.25 percent per annum. The contributions are commingled with the money in the pension fund, which is the fund used to pay members’ pensions. For members who want to eliminate volatility in their investment returns, the Fixed Annuity, which guarantees the principal and pays a statutory rate of return, is an excellent investment.

Variable A — In this program, contributors participate in a fund composed mainly of common stocks.  There is no guaranteed rate of return. The rate of return is dependent on the performance of the segments of the stock market in which the fund is invested.

Variable B — In this program, the investment vehicles are generally more conservative and less volatile than stocks and bonds. As you know, interest rates are rather low at this time and if interest rates continue to remain low, Variable B will not earn as great a return as the Fixed Annuity.

RichTeacher recommends TDA's Fixed Annuity at 8%. While each member should make investment decisions based on his or her individual circumstances and tolerance for risk, it may be of interest to see a snapshot of how members invested their funds in the TDA as of June 30. A total of $13.1 billion was invested in the program. Of that amount, 57.1 percent ($7.5 billion) was invested in Variable A, 40.9 percent ($5.4 billion) in the Fixed Annuity and 2 percent ($260 million) in Variable B.

No one can predict the future, so we cannot offer any specific advice. Investment experts tell us that a well-diversified portfolio of stocks and fixed-income investments is an appropriate method for members to invest their retirement funds.

In addition to TDA, Teachers get matching funds from the TRS pension fund.
The required pension deductions for all newly hired employees of the Department of Education is 3 percent of salary, which should be indicated on pay stubs, will be forwarded to the TRS and will continue until the employee has completed 10 years of credited service or membership in the system.

For more information on the TDA read PensioNews, check the TDA section on the Teachers’ Retirement System Web site, contact RichTeacher.net or call your UFT borough office about pension deductions.

A TRS welcome kit is slated was sent to each new member. If you didn't receive it, call and get one. When you receive the kit, file the required forms as quickly as possible. These forms include an enrollment application, a form to apply for credit for any work previously done as a public employee in New York State and a Designation of Beneficiary Form for the Qualified Pension Plan (QPP) and one for the TDA. TRS must receive these forms to set up your pension accounts.

Reminder

For members who wish to save more money for retirement than is permissible in the TDA program, or for members who wish to have more investment choices than the three available in the TDA program, the City of New York makes available another tax-favored retirement savings program under Section 457 of the Internal Revenue Code. For information on the City of New York’s deferred compensation plan, call 1-212-306-7760 or log on to www.nyc.gov/defferedcomp.

Financial counseling

Richteacher does not sell Financial products: Our Financial counseling is provided on a free-for-reference basis as part of your membership on our network.We expect no profits and assume no liabilities from your financial decisions.

To hired a pay-per-service Financial Counseling, you may call TRS or NYSUT Member Benefits at 1-800-626-810.

2006-2007 Annual Benefit Statements

You should have received, or will soon receive, your Annual Benefit Statement that summarizes your Total Service Credit and account balances. The ABS also provides information about your TDA contribution rate, such as your 2006 rate, your maximum rate for 2007 and your rate under automatic re-enrollment. Use this information to plan your 2007 TDA participation. If you believe any of the information in the ABS is incorrect contact TRS immediately.

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