Sunday, November 04, 2018

Maximum TDA Limit Raised To $19,000 For 2019.






























Starting  January 2019 the maximum annual limit will increase by $500, from $18,500 to $19,000.   If the educator is 50 years of age or older, the TDA allows a "catch up" contribution of $6,000, which is unchanged from 2018.  Therefore, the total maximum limit for educators 50 years of age or older is $25,000.

The more you contribute to the TDA, the less you pay in taxes that year since your TDA contribution is tax deferred..  Moreover, the TDA is exempt from State and City taxes in New York State.

25 comments:

Anonymous said...

Still waiting for the Roth version!

Anonymous said...

I am under 50, but max out the 457 from the NYC Deferred Compensation plan too. I’m avoiding city and state taxes on the TDA. The 457 offers a Roth version I take advantage of sometimes. That’s a total of $38,000 put away. Then put another $6,000 in a Roth IRA. The only thing that makes this job worth doing is watching my money grow and putting more away.

And if I don’t make it to the pension, I’ll be just fine. If I do make it, then I’ve created generational wealth that will far outlast me...or my kids will blow my life’s work. Oh well, money buys options.

Jonathan said...

If I can't calculate the percentage, is there a "maximum" button I can click?

Anonymous said...

To 1:28 if you put it in the city 457 20,000 annually. You withdraw 20,000 when you were retired
or 59 1/2 you don’t pay city or state tax also. There is a 20,000 or year limit.

Anonymous said...

Impressive on ability to max out on both TDA and NYC Def. Comp. How do you manage? I am maxing out on TDA, and only 16% on Def. comp. When daughter finishes college hope to max on both.

Anonymous said...

Thanks for the info. 12:59.

The way I afford to max it out is I am frugal. An ancient car, a small house in not the best area, never order lunch, etc. and it’s all worth it! With the amount currently in my TDA alone(I have it in Fixed since everything else I have is in the market) I generate $3000 a month, every month, no matter what, forever! It’s like I’m making an extra $36,000 a year. And that 36k, plus 19k I put in next year, will then generate $3700 or $300 every month in perpetuity the following year and so on.

I see teachers with their fancy cars, Starbucks daily and European vacations, that’s fine for them. For me, being financially secure gives me great joy and peace. Max out that TDA!

GrandmaJudy said...

My husband’s retirement date is Feb. 1 2019, with a full 30 years of service. Could he put his entire paychecks from January 2019 into the TDA before he retires? The 457 deferred looks interesting but we didn’t even know about that one. Is it too late to do anything with that? Thank you.

Chaz said...

GJ:

Yes but let the TRS know.

Anonymous said...

can you withdrawal $20,000 a year and not pay state and city tax from both the 457b and the tda? Thus getting $40,000 a year with no state and city tax?

Prehistoric pedagogue said...

4:25 PM. yes you can provided you take no other withdrawals from IRA, annuity or other tax advantaged source that would put you over the 20000 limit.

Anonymous said...

@9:30 PM
why cant you have both a maxed out TDA, as well as european vacations?
life is meant to be lived.

Anonymous said...

1:28 AM (& 9:03 PM): Can you explain the math behind $3000/month? Are you projecting out until your earliest penalty-free withdrawal? You have that now or you WILL have that? At 7%, $3000/month would require an accumulation of over $500k, which would take over 15 years to achieve. Maybe you HAVE been putting it away for that long, in which case you deserve a major pat on the back. And how does every new $19k add another $300/month? At earliest withdrawal date? At RMD date? Thanks!

Anonymous said...

I do the same as you. Max out everything including my IRA with Vanguard and trying to FIRE.

Anonymous said...

So $40,000 a year from both the 457 and 403b? What happens when we start collecting our pension, social security, and IRA?

Anonymous said...

Just as you work hard on putting money into TDA, 457, and
any other retirement accounts, You must have an exit strategy.
Or you will give it back in taxes.
I would like CHAZ to do a story on how to take your money out of these
retirement accounts and give different scenarios. Thank you CHAZ in advance.

Anonymous said...

To 11:50
Always check with your accountant .
TDA no city or state tax when withdrawn.
457 the first 20,000 are tax free city and state ,
After that then you pay city and state tax.

kenny said...

If you have $500,000 in your TDA when you retire you can basically get $3000 a month which is your interest at 7%. Not a bad extra check to get each month but you do have to pay taxes on that. I don’t really agree with the guy that lives in a small house in a bad neighborhood and never goes on vacation. You can still live a great life with a lot of perks and still contribute to the TDA

Anonymous said...

7:27
You only pay federal tax.
TRS would hold 20% for State Tax. When you file your
taxes you may get some money back or pay extra federal tax.

Anonymous said...

$30,000
TRS will hold 20% for federal tax. No city and state taxes.
In the 457 you redraw 30,000 you pay federal tax on 30,000
and 10,000 city and state taxes.

kenny said...

why dont more people just take out the interest at retirement and have another check each month in addition to the pension?

Chaz said...

Kenny:

I intend to do just that.

kenny said...

chaz- what is the negative side of doing that? If i have 500K when im done is it as easy getting a check each month for 3 grand? How much of that would I lose to taxes? 20%?

Chaz said...

There is no negative side. The TDA is considered a pension and exempt from State and City taxes.

kenny said...

So using the 500K as a number and 7 % interest how much taxes would a person have to pay each year if they just wanted to have a check each month on the interest

Chaz said...

Kenny

Assuming you live in New York State and you pay 20% federal tax. Here is my calculation.

500,000 x 0.07 = $35,000 x 0.20 = a tax of $7,000