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Tax Deferred Annuity?


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#1 nycteacher

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Posted 21 January 2007 - 09:22 PM

Hey guys. I'm new to the forum. I'm a NYC public school teacher. They don't offer 403b. They only offer the tax deferred annuity. Now-I'm not the smartest apple on the block-but it doesn't sound like a good option for me. Can I still enroll in the 403b, even if NYC Board of Education does not provide it? Any information would be appreciated. Thanks.

#2 Guest_Sierra_*

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Posted 22 January 2007 - 01:33 PM

QUOTE(nycteacher @ Jan 21 2007, 09:22 PM) View Post

Hey guys. I'm new to the forum. I'm a NYC public school teacher. They don't offer 403b. They only offer the tax deferred annuity. Now-I'm not the smartest apple on the block-but it doesn't sound like a good option for me. Can I still enroll in the 403b, even if NYC Board of Education does not provide it? Any information would be appreciated. Thanks.


First and foremost you need to know that the the Department of Education of the City of New York has always had but one 403(b) investment provider. This provider is the Teachers' Retirement System of the City of New York. The TDA (Tax Deferred Annuity) is just another way of saying that the salary reduction savings program is authorized under Internal Revenue Code Section 403(b). So you do have at your disposal a 403(b) Program.

You are not forced, however, to do your salary reduction investing for retirement thru the TDA (403(b)) Program offered by the Teachers' Retirement System. As an alternative I would have you invest in the Deferred Compensation 457(b) and 401(k) Plans of the City of New York. Check them out and get back for more discussion.

Peace and hope,
Joel L. Frank

#3 apteacher

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Posted 22 January 2007 - 02:30 PM

QUOTE(Sierra @ Jan 22 2007, 10:33 AM) View Post

QUOTE(nycteacher @ Jan 21 2007, 09:22 PM) View Post

Hey guys. I'm new to the forum. I'm a NYC public school teacher. They don't offer 403b. They only offer the tax deferred annuity. Now-I'm not the smartest apple on the block-but it doesn't sound like a good option for me. Can I still enroll in the 403b, even if NYC Board of Education does not provide it? Any information would be appreciated. Thanks.


First and foremost you need to know that the the Department of Education of the City of New York has always had but one 403(b) investment provider. This provider is the Teachers' Retirement System of the City of New York. The TDA (Tax Deferred Annuity) is just another way of saying that the salary reduction savings program is authorized under Internal Revenue Code Section 403(b). So you do have at your disposal a 403(b) Program.

You are not forced, however, to do your salary reduction investing for retirement thru the TDA (403(b)) Program offered by the Teachers' Retirement System. As an alternative I would have you invest in the Deferred Compensation 457(b) and 401(k) Plans of the City of New York. Check them out and get back for more discussion.

Peace and hope,
Joel L. Frank

Wow, I checked it out, and it's pretty impressive. Excellent diversification across several asset classes and low fees, e.g., .04% for S&P 500. And the administrative fees? .0003% (+ 12.50 a quarter). NYC teachers have access to what looks like a pretty strong plan.


#4 Guest_Sierra_*

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Posted 22 January 2007 - 03:48 PM

QUOTE(apteacher @ Jan 22 2007, 02:30 PM) View Post

QUOTE(Sierra @ Jan 22 2007, 10:33 AM) View Post

QUOTE(nycteacher @ Jan 21 2007, 09:22 PM) View Post

Hey guys. I'm new to the forum. I'm a NYC public school teacher. They don't offer 403b. They only offer the tax deferred annuity. Now-I'm not the smartest apple on the block-but it doesn't sound like a good option for me. Can I still enroll in the 403b, even if NYC Board of Education does not provide it? Any information would be appreciated. Thanks.


First and foremost you need to know that the the Department of Education of the City of New York has always had but one 403(b) investment provider. This provider is the Teachers' Retirement System of the City of New York. The TDA (Tax Deferred Annuity) is just another way of saying that the salary reduction savings program is authorized under Internal Revenue Code Section 403(b). So you do have at your disposal a 403(b) Program.

You are not forced, however, to do your salary reduction investing for retirement thru the TDA (403(b)) Program offered by the Teachers' Retirement System. As an alternative I would have you invest in the Deferred Compensation 457(b) and 401(k) Plans of the City of New York. Check them out and get back for more discussion.

Peace and hope,
Joel L. Frank

Wow, I checked it out, and it's pretty impressive. Excellent diversification across several asset classes and low fees, e.g., .04% for S&P 500. And the administrative fees? .0003% (+ 12.50 a quarter). NYC teachers have access to what looks like a pretty strong plan.


RESULT OF UNINTENDED CONSEQUENCES:

Prior to 2001 the contribution limit to a 403b was more than that to a 457(b). Moreover, contributions to both Plans could not be in excess of the 403(b) limit. This is called "aggregation". So even though the teachers' union (United Federation of Teachers) was very instrumental in not allowing teachers to join the 457(b) Plan there was no urgency to change the union policy because 403b permitted a larger salary deferral in additional to the aggregation rule.

This all changed with the 2001 legislation which repealed the aggregation limit and equalized the per plan maximum contribution amount. Now the UFT could no longer use the aggregation rule and the larger 403b contribution limit to keep its members out of the Deferred Compensation Plans. So when Mayor Bloomberg invited the teachers to contribute to the 457(b) and 401(k) Plans the UFT was very hard pressed to say no thank you as it had done for the previous 25 years. Politically it was forced to accept the invitation.

The 2001 legislation meant you may, for the first time, max out on the 403b and 457 or 457 and 401k in the same tax year. Aggregation remains with 403b and 401k. So now if you have the three code section plans at your disposal as NYC teachers do you have to rate them. In my view the 403(b) is last because of its limited investment options and its rule that you cannot move all of your money from one investment option to the other more rapidly than 1/12 of the account balance over 12 months. Number 2 is the 401(k) Plan because of its 10 percent penalty tax. Number 1 is the 457(b) Plan because of its exemption from the 10 percent penalty tax. So NYC teachers are in the catbird seat. They may CAN the 403(b) and still particpate in two other plans which are extremely well run at very low cost. I recommend the Target Date funds which can be purchased at 21 basis points.

Peace and hope,
Joel L. Frank

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#5 Guest_Sierra_*

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Posted 22 January 2007 - 04:11 PM

In my view NY state and City have 457 Plans that set the standard for all similar plans nationwide. The NY State 457 Plan is obviously for State employees but unlike many other states it allows local governments to opt in for the benefit of local employees. This Plan is available to all public school districts in the State of NY. The NYS Teachers Union knew of this but still was addicted to collect endorsement fees from ING. This is the depth of unethical and illegal behavior the individuals that run the State teachers union stooped to. Thank God Elliot Spitzer got rid of this unholy and illegal alliance.

If you want to keep the commissioned broker out of the public school districts of New York just join the state's 457 Plan. It is as simple as that. Just DO IT!!

Peace and Hope,
Joel

Just imagine: If the union simply did the "right thing"...not the "extraordinary" thing but simply the right thing. Every single public employee in the state who chose the salary reduction agreement route for investment planning over the past 30 years would have tens of thousands of dollars more for hopefully a carefree retirement. To all the NYSUT officials responsible for stealing from teachers: you are a despicable group of people.