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Emmysue

Nyc Deferred Compensation Plan

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I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

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I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

 

 

Hi Emmysue,

You folks still have the dream fixed account that we all would like, 8.25%! Interest only means you would get over $24000 per year as a supplement to your pension. Excuse my ignorance, but why change, unless, of course, you will get the same guarenteed interest?

What am I missing?

Steve

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I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

 

 

Hi Emmysue,

You folks still have the dream fixed account that we all would like, 8.25%! Interest only means you would get over $24000 per year as a supplement to your pension. Excuse my ignorance, but why change, unless, of course, you will get the same guarenteed interest?

What am I missing?

Steve

 

 

Hi Steve,

 

Trust me, I'm very grateful for the fixed 8.25%. : )

 

I'm not looking to switch. I am allowed to contribute the maximum to a 457 in addition to my pension and 403b.

 

I'm looking for a supplemental retirement savings account.

 

Instead of putting extra money in a ING DIRECT Money Market, the Stable Income Fund with the NYC Deferred Compensation Plan performs much better and is very conservative.

 

Just wondering whether to go with a 457 or 457 Roth.

 

Thanks again.

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Guest Joel Frank

I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

 

 

Hi Emmysue,

You folks still have the dream fixed account that we all would like, 8.25%! Interest only means you would get over $24000 per year as a supplement to your pension. Excuse my ignorance, but why change, unless, of course, you will get the same guarenteed interest?

What am I missing?

Steve

 

 

Hi Steve,

 

Trust me, I'm very grateful for the fixed 8.25%. : )

 

I'm not looking to switch. I am allowed to contribute the maximum to a 457 in addition to my pension and 403b.

 

I'm looking for a supplemental retirement savings account.

 

Instead of putting extra money in a ING DIRECT Money Market, the Stable Income Fund with the NYC Deferred Compensation Plan performs much better and is very conservative.

 

Just wondering whether to go with a 457 or 457 Roth.

 

Thanks again.

 

For our non-NYC viewers the 403(b) Plan of the TRS of the City of New York has two fixed rates of return: 7.0 percent applies to United Federation of Teachers (UFT)represented investors and 8.25 percent applies to all other investors in the Fixed Return Fund. In my capacity as Columnist of Current Pension Topics of the Chief-Civil Service Leader, a civil service weekly, the following question and answer was publish in our issue of September 9, 2011:

 

I am a contributor (H.S Principal) to the Tax Deferred Annuity program (TDA) of the Teachers' Retirement System of the City of New York. If employer contributions are not allowed to TDA why is it that the City pays me 8.25 percent interest when they can borrow money at a lower interest rate? Is this not a contribution by the City to my account? P. S.

 

A.: Yes, more than half of the interest credited to your account is contributed by the City. The Administrative Code of the City of New York (AC) establishes the interest rate for the TDA's Fixed Return Fund. For non-UFT contributors the rate is 8.25 percent (AC 13-582 d 1). For UFT contributors the rate is 7.0 percent (AC 13-582 d 2).

 

Having said that, the City is simply borrowing money from your Fixed Return Fund account. This is fine so long as the City does not pay you interest at a higher than market rate. Currently the City can borrow money on Wall Street at about 3 percent. So why is it borrowing your money at 8.25 percent? You'll have to ask the Mayor, and your State Legislators (Senate and Assemply). By paying you more than what lenders demand (remember the principle of supply and demand?) the City is simply making a contribution to your TDA Fixed Return Fund account. Assume your account balance is $100,000 on January 1, 2011 and you make no contributions during 2011. If the City paid you 3 percent or $3,000 as your interest payment for 2011 there would be no direct contribution by the City to your account. But the City is willing to pay you 8.25 percent or $8,250. The City's direct contribution to your account is calculated as follows: $100,000 times .0825= $8,250. $100,000 times .03 =$3,000. $8,250-$3,000 = $5,250= City's contribution. For a UFT contributor the City's contribution is calculated as follows: $100,000 times .07=$7,000. $100,000 times .03 = $3,000. $7,000-3,000=$4,000=City's contribution.

 

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Guest Joel Frank

NYC public school workers have a choice of three plans: 403b, 457b and 401k. 457b and 401k are offered by the Deferred Compensation Plan of the City of New York. Federal law allows them to max out the 403b and the 457b during the same year. In the alternative they can max out the 457b and 401k in the same year. The 457b and 401k sport the same investment menu which does not include a fixed return fund as does the 403b operated by the TRS.

 

The only attraction to the 403b is the 7/8.25 percent fixed return. These guaranteed rates of return makes investment in the other investment options of the TRS/403b plan highly unattractive. IS THIS THE WAY TO RUN A RAILROAD?

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I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

 

 

Hi Emmysue,

You folks still have the dream fixed account that we all would like, 8.25%! Interest only means you would get over $24000 per year as a supplement to your pension. Excuse my ignorance, but why change, unless, of course, you will get the same guarenteed interest?

What am I missing?

Steve

 

 

A fixed rate of 8.25%!!! I would max out my contributions for that kind of quarantee on my 403b! What a deal!

 

If somebody please explain to me what kind of 403b this is. Is it a fixed rate annuity type of product that one buys into with the contributions? Thanks.

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I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

 

 

Hi Emmysue,

You folks still have the dream fixed account that we all would like, 8.25%! Interest only means you would get over $24000 per year as a supplement to your pension. Excuse my ignorance, but why change, unless, of course, you will get the same guarenteed interest?

What am I missing?

Steve

 

 

A fixed rate of 8.25%!!! I would max out my contributions for that kind of quarantee on my 403b! What a deal!

 

If somebody please explain to me what kind of 403b this is. Is it a fixed rate annuity type of product that one buys into with the contributions? Thanks.

 

The market place doesn't pay this, its the taxpayers. I believe its the only fixed rate account of this kind in the country. Its shocking that with all of the pension bashing about tax payer funded benefits that this account still exists.

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Guest Joel L Frank

NYC public school workers have a choice of three plans: 403b, 457b and 401k. 457b and 401k are offered by the Deferred Compensation Plan of the City of New York. Federal law allows them to max out the 403b and the 457b during the same year. In the alternative they can max out the 457b and 401k in the same year. The 457b and 401k sport the same investment menu which does not include a fixed return fund as does the 403b operated by the TRS.

 

The only attraction to the 403b is the 7/8.25 percent fixed return. These guaranteed rates of return makes investment in the other investment options of the TRS/403b plan highly unattractive. IS THIS THE ANYWAY TO RUN A RAILROAD?

 

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Guest Joel L Frank

I'm a school administrator in New York City. I retire in 3 years. I'll receive a pension, health benefits, etc. Also, I currently have around $300,000 in a 403b at 8.25% fixed.

 

No other assets, though, except for about $35,000 in a money market (emergency fund).

 

Would like to set up a supplemental retirement savings.

 

I'm considering either a 457 or 457 Roth via the New York City Deferred Compensation Plan.

 

Any comments would be greatly appreciated.

 

 

I would urge you to max out on the pre-tax 403(b) and 457(b). I would then max out on the NYCE IRA assuming you qualify. (New York City Employee IRA Program administered by the Deferred Compensation Plan of the City of New York). You can hedge your bet,somewhat, by investing in the Roth feature of the NYCE IRA.

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Guest Joel L. Frank

NYC public school workers have a choice of three plans: 403b, 457b and 401k. 457b and 401k are offered by the Deferred Compensation Plan of the City of New York. Federal law allows them to max out the 403b and the 457b during the same year. In the alternative they can max out the 457b and 401k in the same year. The 457b and 401k sport the same investment menu which does not include a fixed return fund as does the 403b operated by the TRS.

 

The only attraction to the 403b is the 7/8.25 percent fixed return. These guaranteed rates of return makes investment in the other investment options of the TRS/403b plan highly unattractive. IS THIS THE WAY TO RUN A RAILROAD?

 

 

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