Thursday, June 15, 2006

The TRS 403b (TDA) Plan Revisited

In my previous column I commented on how limited, inflexible, and uncompetitive the New York City Teachers' Annuity Plan is when compared to the New York City's 457b/401k plans. Many of the people who read that article asked me if they can start contributing to the City plans without contributing to the TDA? The answer is yes. In fact you don't have to invest a dime into the TRS TDA and uses the City plans until you max out your contribution. Interestingly, if you ask the UFT they advise you to use the City's 457b/401k plans only after you max out in the TRS 403b plan. If you are an ultra-cautious invester and selected the fixed option (8.25%) for 100% of your investment, that is good advice. However, many teachers invest into the inferior variable options and the union is more concerned with keeping teachers clueless about the TDA shortcomings than the better deal the teachers can get using the City plans.

Further, the UFT acts like they have no control over the Trustees of the fund. What a load of crap! The UFT directly elects three of the seven Board members. Moreover, any decision made by the Board Of Trustees must include one of the UFT elected menbers. Therefore, the UFT has veto power over any changes the TRS wants to do. In addition, if the UFT really wants to improve the TRS TDA they only need to propose it. All seven trustees are beholden to the UFT since the four other Trustees are appointed only after being informally approved by the UFT. Since all the Trustees serve three-year terms, any of the Trustees that disappoints the union can find themselves out of the Trustee business.

Finally, I hear rumors that the variable options will be enhanced (whatever that means). How?, when?, does it compare to the City plans? I hope it is true? However, in my case it is "seeing is believing"!

8 comments:

Gotglasses said...

Hi Chaz- Re TDA vs NYC Deferred Comp. Note that YOU CAN transfer your old underperforming IRA's into the NYC 401K and realize great stock portfolio returns too!

Put your deferrals/paycheck deductions into the 457 plan in NYC for the stocks and keep the TDA for the great 8.25% cash account return it does offer.TDA is not nimble at all - strictly a dollar cost averaging fund with heavy loads and consultant fees.

With the NYC deferred comp plan I've more than doubled my money +130% in 3 years ( really a down market most of the time too!) vs about + 50% in TDA. TDA took a huge hit in 2001, at least twice my losses in my other - NYS deferred comp plan, where I had day to day control. The NYC plan is the most flexible plan available now, even though it does have the new trading restrictions since the Spitzer investigations resulted in eliminating the day trading that did take place - with much success for some - before. I miss those days - hopefully these plans will wake up and offer some closed end funds and ETF's for the adventurous among us.

Certainly TDA never will!!! It takes TDA 3 years to make the transfers we do in 15 seconds with the deferred comp plans.

Anonymous said...

I think Chaz is WAY off. The money I put into Variable A went up about 10 to 12 times over my original investment. I started teaching in the 1960's and retired in 1/2000. When it got whacked by the market a few years ago,it went down much less than my personal investments, and it's coming back much stronger.If I was smarter and moved it to fixed at retirement, I'd be even further ahead.Because the U.F.T has the whip hand, it is safe & well-managed without a big vig.The lack my ability to play with it or get exotic investments is a godsend in disguise.Years ago I agreed with Chaz, but at the end of the day I'm semi-rich because of TRS Variable A!

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Hi. Were retirees supposed to receive direct deposit from NYC TRS today, January 31, 2015? I received nothing.