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Current Pension Topics: Cops, Fire Can Borrow More Current Pension Topics Cops, Fire Can Borrow More By JOEL L. FRANK
D.A. A.: During or after the calendar year the pensioner attains age 65. *** Q.: Why are members of the Police and Fire pension systems permitted to borrow up to 90 percent of their accumulated deductions while the rest of us are limited to 75 percent? A.E. A.: It's the law. Ask your union to lobby Albany to change the law. Tell your union that you should have parity with the cops and firefighters on this issue. *** Q.: I am a Tier 1 Teacher, age 63, about to retire after 40 years of service. I have a sizable amount in my Annuity Savings Fund and plan to take a maximum "loan" and roll it over to the 401(k) Plan of the city. I also have a sizable taxable "excess" amount which is eligible for rollover but cannot make up my mind what to do with it. What is your opinion. M.S. A.: Assume you have $100,000 of "excess" that is eligible for rollover. If you annuitize it with the Teachers' Retirement System, you will receive $9,365 annually during your lifetime, with all payments ceasing upon your death. In return for this lifetime guarantee of income. you have transferred title to $100,000 to the TRS. You must start to receive this annuity income now at age 63. If, however, you forgo this income by effectuating a rollover of the $100,000 to the 401(k) Plan, you need not start an income stream until reaching age 70-1/2, though it is your right to start such a stream earlier if you so choose. At age 70-1/2 you are not compelled to annuitize the account balance, as you are at age 63 with the TRS. You can elect other lawful payout schemes, with annuitizing being just one. You own this rollover account like you own the shirt on your back and, therefore, any balance that remains upon your death is payable to your beneficiaries. I urge you to roll over the $100,000 to the 401(k) Plan of the City of New York and invest all of it in the 2015 Fund. *** The fee ING pays the New York State United Teachers (NYSUT) for its endorsement of the ING/403(b) variable annuity known as Opportunity Plus is based on NYSUT membership. For 2006 the fee is calculated by multiplying 515,000 heads by $6.50. This comes to $3,347,500. Randi Weingarten, in the Chief's May 19 For the Record column, asserts that the endorsement deal has nothing to do with city Teachers because the UFT does not allow city Teachers to participate in Opportunity Plus. On the contrary, UFT members do benefit from the deal because a portion of the $6.50-per-head endorsement fee is used by NYSUT to cover the costs of other NYSUT benefit programs which city Teachers are allowed to participate in. Moreover, Ms. Weingarten omits the fact that in addition to being offered a 403(b) annuity with the TRS, UFT members may also invest their salary reductions in the city's Deferred Compensation 457(b) and 401(k) Plans (DCP). While the TRS 403(b) Program offers only one viable variable fund, Variable A, the 457(b) and 401(k) Plans offer seven funds plus nine time-based pre-arranged portfolios comprised of the seven funds. While emphasizing the fact that TRS charges a very low 18 basis points ($18 per $10,000) for its equity fund called Variable A, she didn't divulge the fact that the DCP charges 4 basis points ($4 per $10,000) for its Equity Index Fund. Mr. Frank is a fee-only Retirement Financial
Planner. He can be reached by telephone at (732) 536-9472, by fax at (732)
536-7373, or via e-mail at
rollover@optonline.net.
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