Each Fall, BERS sends all eligible members an Enrollment Kit containing information and forms for the following tax year.  You can use the form in this kit to enroll for the first time or change your contribution rate, allocation of future contributions or initiate a conversion of your past contributions. Your current investment election will remain in effect unless you tell BERS to change it by returning a completed TDA Investment Change form.

You should also complete a TDA Designation of Beneficiary form when you enroll.  Your TDA beneficiary designation is separate from your beneficiary designation under all other benefit and retirement programs.

School Crossing Guards, School Safety Officers, Transferred Contributors, and employees of the School Construction Authority are not eligible to participate in the BERS TDA Program.

Contributions - You select a contribution rate to be deducted from your pay before current Federal, New York State, and New York City income taxes are taken, allowing you to save more for retirement.  If you live outside of New York State, check with your tax advisor to see if your TDA contributions are exempt from current State and Local taxes where you reside.  The portion of your contributions to the TDA Program which, under normal circumstances, would be subject to current taxes, will be invested to provide additional retirement income.  Taxes will be paid when contributions and investment results are distributed from the TDA Program.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) simplified the rules used to determine your maximum contribution amount.  TDA participants can now contribute the lesser of 100% of salary or a dollar limit defined under the Internal Revenue Code. 

In addition to the standard dollar limit, if you have at least 15 years of service and your average annual prior TDA contributions did not exceed $5,000, you may be eligible to contribute under the catch-up provisions.  The catch-up provisions allow you to contribute up to an additional $3,000 each year.  This additional amount (catch-up) is limited to a $15,000 lifetime maximum. 

The Internal Revenue Service (IRS) also provides an additional savings incentive to participants age 50 or older.  The dollar limit on contributions is increased for participants who are at least age 50.  The following chart illustrates the dollar limits through 2006.  The limits after 2006 are indexed to inflation and may be increased in increments of $500. 

If you are eligible to participate in the BERS TDA Program, you will receive an Enrollment Kit in the Fall that contains a form indicating your maximum dollar limit for the upcoming tax year.

Investment Options - The TDA Program offers two options, the Fixed Program an the Variable Program.  The Fixed Program guarantees a fixed rate of return that is set by the New York State Legislature.  That rate is currently set at 8.25% per annum.  The Variable Program invests in a fully diversified portfolio of common stocks and bonds.  The financial objective is to capture the return of the broad equity market while attempting to control its short-term volatility.  Since this program is subject to the fluctuations of the stock market, it may carry higher risk than the Fixed Program, but offers the potential for greater return.  The Variable Program is currently co-invested in the Teachers’ Retirement System Tax Deferred Annuity Variable A Program and returns are based on the performance of the investments in that program.  The Variable Program also includes a 4% increment credited monthly to the accumulated units.

Investment Changes - You may change the way your future contributions and past contributions are invested once each quarter. Future contributions may be split between the Fixed and Variable Programs in multiples of 5%. You may also convert a portion of your past contributions from one account to the other. The portion being converted must be in a multiple of 5%. If you are converting less than $1,000, monthly installments of $83.33 will be transferred until the entire amount is converted. Conversions of more than $1,000 will occur in monthly installments over a one-year period. Any request to convert funds will immediately stop any prior conversion.

You should complete and submit a TDA Election Change form to request a change in the allocation of your future contributions or a conversion of your past contributions.  Your completed form must be received by BERS at least 30 days before the beginning of the next calendar quarter.  The following table shows the 2006 schedule for submitting TDA Election Change forms: 

*If 30 days prior to the beginning of the quarter falls on a weekend, the deadline is the previous business day.

Expenses - The TDA Program is a self-sustaining program; expenses for the administration of the Fixed Program are covered by a charge of $1.50 per month from contributing participants.  Additionally, to cover the expenses of the Variable Program, a base charge is levied against the assets.  Currently, this base charge is 2/100ths of 1% of the assets per month.

Loans - Participant loans are available under the TDA Program. This loan program allows members to borrow from their TDA account without incurring a tax liability. The principal and interest are added back into your account as loan payments are made. The loan program complies with all applicable laws, rules and regulations of the IRS and administrative rules of BERS

To be eligible for a TDA loan:

·        you must have been a TDA participant for one year, and

·        your current status must be active, on leave with pay or, you are a retired member with TDA Deferral status, and

·        you are not in default on an existing QPP, TDA, or Tier Enhancement loan, and

·        you have not taken a TDA loan during the last twelve months.

(click here for more details on TDA Loans)

Distributions and Withdrawals - The IRS has established rules for distributions and withdrawals from your TDA Account.  The rules vary according to the time the contributions were credited to your account.  You may withdraw all or part of the value of your TDA account as of December 31, 1988 at any time.  The value of your contributions and investment results credited after 1988, may only be withdrawn (in whole or in part) in accordance with the following:

·        after you leave employment, or
·        if you become disabled, or
·        after you reach age 59 ½, or
·        if you are taking a hardship withdrawal

Retired participants may elect to receive their contributions as a fixed-dollar annuity, a variable annuity, a lump-sum pay out, or a rollover into another 403(b) TDA Program, 401(a) or (k) plan, 457 plan, or Individual Retirement Account (IRA).  The receiving plan must be able to meet the recordkeeping requirements to receive TDA funds.  Therefore, you should always check with the new investment provider prior to requesting a transfer or rollover of your BERS TDA Program funds.  Vested retired participants may also elect TDA Deferral status, which means that TDA funds can remain in the Program and continue to be credited with investment results until withdrawn.

Amounts you receive as the result of a withdrawal are subject to Federal, New York State and New York City income taxes, and may also be subject to an additional 10% Federal tax in the year of the withdrawal unless one of the following exceptions applies:

·        You make your withdrawal in conjunction with your termination of employment in or after the year in which you attain age 55; or

·        You make your withdrawal after you reach age 59½; or

·        Your withdrawal is used to pay medical expenses to the extent that those expenses are deductible for Federal income tax purposes; or

·        The withdrawal is made in conjunction with your disability or service retirement.

The value of your Variable Account will depend upon the unit value for the month following the receipt of your request for the withdrawal. If however, your withdrawal is made in conjunction with your retirement, the value of your variable account will depend on the unit value for the month in which you retire.

Hardship Withdrawals - Post-1988 contributions (but not post -1988 investment earnings) may be withdrawn by you as an active member in the event of hardship.  You may only withdraw contributions on up to the dollar amount needed and you must have exhausted all other financial resources to meet the hardship.  Recognized hardship conditions include:

·        Medical expenses incurred by you, your spouse, or dependents.
·        Payment of post-secondary school tuition for you, your spouse, or dependents.
·        Payments to prevent the eviction from, or foreclosure on your principal residence.
·        For your purchase of a principal residence.

Required Minimum Distributions - A Required Minimum Distribution (RMD) is a withdrawal the IRS requires from your BERS TDA account each year.  Under the IRS rules, you must begin taking distributions from your Post-1986 funds* by April 1 of the year following the later of:

•         the year you separate from service with BERS, or
•         the year you attain age 70 ½.

This means you can delay your first distribution until the following calendar year.  In that case, two distributions are required in the first year, the first by April 1 for the previous year and the second by December 31 for the current year.

Distributions of the Pre-1987 funds** are required to begin by December 31 of the year you attain age 75, regardless of employment status.

* The IRS allows you to “grandfather” the balance in your TDA account as of December 31, 1986 until you turn age 75.  This balance is adjusted (reduced) by withdrawals made in excess of your RMD each year, but is not considered when calculating you current year RMD.  This adjusted balance is known as your Pre-1987 funds and is included in your RMD calculation beginning in the year you attain age 75.

** The funds credited to your TDA account since December 31, 1986 (including investment earnings on your December 31, 1986 balance and all contributions and earnings credited since that date) are known as your Post-1986 funds.  This is the amount used to calculate your RMD between ages 70 ½ and 75.

If you elect TDA Deferral status, there are several ways to satisfy the RMD rules as they apply to your BERS TDA account.  They are:

·        Direct Withdrawal - Withdraw an amount at least equal to your RMD each calendar year by December 31.  (RMD distributions are not eligible to be rolled over.)

·        Annuity - You can use your entire account balance to purchase an annuity over your lifetime or life expectancy.

·        Periodic Payments - Your RMD can be paid as a series of periodic payments over the lifetime (or life expectancy) as outlined in the IRS life expectancy tables.

RMDs for 2001 are being calculated under one of five calculation methods available under the old RMD rules.  If you attain age 70 ½ in 2001, you must choose a calculation method to be used for this year only.  Members who are over age 70 ½ would have chosen a calculation method in a prior year and that method will continue to be used for your 2001 distribution. 

Beginning in 2002, one uniform life expectancy table is to be used to calculate RMDs.  The only exception applies to members who have a spouse as their only beneficiary, and that spouse is more than 10 years younger than the member.  Using the new uniform life expectancy table generally results in members having to withdraw less money from their TDA than in prior years. 

If you do not request an RMD each year from your BERS TDA account by November 30, BERS will calculate the required amount and send you a check by December 31.  If you have more than one TDA account, you can combine the accounts for calculation purposes and take your RMD from one account. BERS will calculate only the RMD amount due from your BERS TDA account. 

It is imperative that you receive an amount at least equal to your RMD each year.  The IRS imposes a 50% excise tax on amounts not distributed in any calendar year. 

Deaths - Your current beneficiary is shown on your semi-annual Statement of Accounts.  It is important to review and update your beneficiary as necessary.  If you die prior to withdrawing or annuitizing your TDA account, your balance will be paid to your designated beneficiary shown on the last TDA Designation of Beneficiary form received by BERS. Spouses designated as beneficiaries have the option to keep their inherited funds in the BERS TDA through the variable investment program. The beneficiary of your TDA account is separate from any other designation you may make for your other benefit or retirement programs.  If you die without designating a beneficiary of your TDA account, the death benefit will be paid to your estate.

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