Over the years I have praised the Teachers' Retirement System (TRS) for it'slow administrative feesand their unbeatable Fixed Income Fund that gives an annual dividend of 7% for UFT members and 8.25% for other educators, with no fees! However, the one weakness TRS has is their lack of a ROTH option.
Unlike TRS funds which are tax deferred where appreciation is not federally taxed unril the educator withdraws funds, usually after retirement/ The Roth option allows the educator to pay taxes upfront and any appreciation accumulates tax free and is not subject to the Required Minimum Distribution (RMD) at age 72.
For educators near retirement the ROTH option is not as attractive since the educator would have to pay taxes upfront for any funds that are converted to a ROTH option. On the other hand newer and younger educators who have a long time to retirement, the ROTH option is very attractive since they make less money and the existing tax rates are historically low and can only go higher in the future.
Usethis calculator to decide which is best for you once TRS offers a ROTH option. You can also see a comparison table between our tax deferred TDA and a ROTH option.