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"!