If you're an in-service member of the Teachers' Retirement System of the City of New York (TRSNYC), 2026 brings a meaningful new option to your retirement toolkit — the Roth TDA. This has been in the works for a while, and enrollment opened in November 2025 for contributions beginning January 2026. If you haven't looked into it yet, now is the right timeHere's a plain-language breakdown of what the Roth TDA is, how it compares to the traditional TDA you may already be contributing to, and what to consider before making a decision.
What Is the Roth TDA?
TRSNYC's Tax-Deferred Annuity (TDA) Program has been available to members since 1970. Until now, it has operated on a pre-tax basis — you contribute before taxes are taken out, your money grows, and then you pay ordinary income taxes when you withdraw in retirement.
The Roth TDA flips that equation. Your contributions come out of your after-tax paycheck — meaning you pay income taxes now — but qualified withdrawals in retirement are completely tax-free, including the growth.
Both options live under the same 403(b) umbrella, use the same investment choices (TRS' Passport Funds), and are funded entirely by member contributions with no employer match.
The 2026 Contribution Limits
The IRS limit applies to your combined contributions across both the traditional TDA and Roth TDA. For 2026, the limits are:
- Under age 50: $24,500
- Ages 50–59: $32,500
- Ages 60–63: $35,750 (enhanced catch-up under SECURE 2.0)
- Age 64 and older: $32,500
You can split that limit any way you choose — all traditional, all Roth, or a combination. The flexibility is yours.
Who Should Consider the Roth TDA?
There's no universal answer — and TRSNYC itself recommends consulting a financial advisor before deciding. That said, here are the key factors worth thinking through:
Earlier in your career?
You likely have more years ahead of you for Roth contributions to compound tax-free, and your current income (and tax rate) may be lower than it will be at peak earning years. The Roth TDA can be especially compelling here.
Mid-career or approaching retirement?
The calculus gets more nuanced. You may be in your peak earning years now, which means paying taxes on contributions today happens at a higher rate. But if you expect tax rates to rise — or want flexibility in managing taxable income in retirement — having a Roth bucket alongside your pension and traditional TDA can be strategically valuable.
Already have a traditional TDA balance?
That's not a reason to stop — it's a reason to think about diversification. Having both pre-tax and after-tax retirement savings gives you more control over your taxable income in retirement, which matters especially given that your TRSNYC pension will already generate taxable income every month.
Concerned about RMDs?
The Roth TDA is not subject to Required Minimum Distributions during your lifetime, unlike the traditional TDA. If leaving money to grow as long as possible — or passing assets to heirs — is a priority, this is a meaningful distinction.
A Few Important Details
The 5-year rule applies to earnings
Your Roth contributions can be withdrawn tax- and penalty-free at any time. But for the earnings to be tax-free, your Roth account must be at least five years old and you must be at least 59½. If you're within a few years of retirement, the Roth TDA may still be worth starting — but understand that the full tax advantage on earnings requires time.
Separation from service at 55 changes the rules
Under the IRS Rule of 55, if you retire or otherwise separate from service in the calendar year you turn 55 or later, you can take withdrawals from your TDA without the 10% early withdrawal penalty — even before age 59½. This is a meaningful option for NYC teachers who retire earlier than the standard threshold.
Enrollment works through your existing TRS account
You can enroll in the Roth option or adjust your contribution split by submitting a TDA contribution rate change through your TRSNYC member portal. The contribution section now includes a separate field for Roth allocations.
This is separate from a Roth IRA
TRSNYC's Roth TDA has no income limits for participation. Roth IRAs phase out at higher income levels. If you've been shut out of a Roth IRA due to your salary, the Roth TDA gives you access to the same after-tax growth concept with much higher contribution limits.
The Bigger Picture: Your Pension Is Already a Pre-Tax Asset
One thing that often gets overlooked: your TRSNYC pension is, functionally, a pre-tax retirement asset. Every dollar you receive in pension income will be taxed as ordinary income in retirement. That's not a flaw — it's simply how defined benefit plans work. But it does mean your retirement income is heavily weighted toward taxable sources before you've even drawn from a TDA.
Adding Roth dollars to your strategy creates a second bucket you can draw from tax-free, giving you more ability to manage your taxable income year to year — which can affect everything from Medicare premiums to what you leave your family.
Beyond the TDA: Other Planning Opportunities We Help With
Roth Conversions
If you have a balance in your traditional (pre-tax) TDA and are approaching or in retirement, it may make sense to convert a portion of that balance to a Roth IRA. You'd pay income taxes on the amount converted, but future growth and qualified withdrawals would be tax-free. This strategy can be particularly powerful in lower-income years — for example, early in retirement before Social Security or pension payments begin at full force. We work with TRSNYC members to evaluate whether a Roth conversion makes sense given their specific income, tax bracket, and timeline.
In-Service Distributions at Age 59½
If you are still working and have reached age 59½, you may qualify for an in-service distribution from your TDA — meaning you can roll a portion of your balance to an IRA without separating from service. This opens up a significantly wider range of investment options and greater flexibility than what's available within the TDA's Passport Funds. It can be a useful strategy for members who want more control over how their supplemental savings are invested while still actively contributing through their paycheck. We can help you evaluate whether this makes sense and walk you through the process.
We're Here to Help You Decide
At Westchester Financial Partners, we work with TRSNYC members and understand how the TDA Program fits into the larger picture — your pension tier, your retirement date, your options at separation — in a way that generalist advisors often don't.
If you're trying to figure out whether the Roth TDA makes sense for your situation, how to split contributions, whether a Roth conversion is worth exploring, or how an in-service rollover might give you more investment flexibility, we'd welcome the conversation.