Does anyone know how these work? Are they tax-free contributions? Can you take the money out penalty-free?? I am wondering if this is like an IRA or 401(k) or if it is like a flex spending account where you can put the money for a house or something.
N.Y.bride
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Re: Teachers- TDA Accounts??
Im not sure what a TDA is, but do you mean a 403B?
summer06bride
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Re: Teachers- TDA Accounts??
I think there may be a penalty if you dont repay within a certain amount of time. But I am not too sure. Sorry. I would be interested to know myself.
TracyInQueens
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Re: Teachers- TDA Accounts??
It's not a flex spending account (I don't think) but you can borrow from it. You would pay it back in installments which would be deducted from your check (at least, this is how it is done in NYC)
I think it's tax-free for now (hence the term 'Tax-Deferred Annuity') and then when you retire, you pay tax as you withdraw.
I do know that when I began to put money in, it helped me at tax time and I didn't miss the money so much because I think it changes your tax bracket. For example, if I put in $100, I would take home about $60 less. Or you can think of it like this: If you put in 10%, it's like you are reducing your salary by 10% for tax purposes.
Regardless, it's a good thing. I have worked with people who have had A LOT of money there when they retired.
amyandbill
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Re: Teachers- TDA Accounts??
The money is deposited into an account of your choice. It comes out of your paycheck pre-tax hence it lowers your taxable income. The money grows each year (depending on your investments) and when you retire you can begin taking money from it. The investment choices usually include many types of mutual funds and money market accounts. Some investments are more risky then others. When you retire and begin taking money out you pay tax on the income. The tax you pay on that as income though will most likely be less because you will be making less so your tax bracket will not be as high. You can also borrow from this money and pay it back into the account over time.
shamrock12472
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Re: Teachers- TDA Accounts??
TDA stands for Tax Deferred Annuity and a lot of school districts use them as a 403b which is basically the same as a 401k. The contributions are taken out pre tax and are allowed to grow tax deferred. Upon retirement or 70 1/2, you begin withdrawing money and that money is taxed at your current income tax rate. Some 403b's will allow for hardship withdrawls or loans but it is particular to the school district and contract. A flex spending account is not the same as the TDA.
