More than 120,000 in-service members and retirees participate in the UFT’s Tax-Deferred Annuity (TDA) program, making it one of the most popular benefits the union has won for its members.

It’s an excellent way to save — the IRS currently allows annual contributions of up to $19,500 for members under age 50 and up to $26,000 for those who are 50 or older.

Teachers’ Retirement System (TRS) members may invest TDA contributions in seven Passport Funds, while members of the Board of Education Retirement System (BERS) may choose between two funds.

Because TDAs are intended for use in retirement, there are tax repercussions and penalties for withdrawals before retirement.

But when you do retire, you have several choices for handling your investment in a TDA. Here are some things you should know:

TDA deferrals

Once you retire, you may defer your TDA, which means leaving the money in your account where it will continue to grow, depending on your investment strategy. However, once you retire you may not make any more TDA contributions. You are still permitted, four times a year, to make changes to how your money is invested in the Passport Funds. If you choose to defer your TDA, you should make sure you have an up-to-date designation of beneficiary form on file with the TRS to protect your heirs and beneficiaries.

If you maintain your TDA account with TRS or BERS by selecting TDA deferral status at retirement, no distributions are required until you reach age 72.

Withdrawals from your TDA

Once you are retired and collecting a pension at any age, you may withdraw money from your TDA without penalty.

You can also take money from your TDA and reinvest it in a direct rollover to another tax-deferred vehicle such as an Individual Retirement Account (IRA).

When you reach age 72, the IRS requires that you start to withdraw money from your TDA account, which is called a Required Minimum Distribution (RMD).

At retirement, you may also choose to annuitize your TDA account, which means you exchange your TDA lump-sum withdrawals for a lifetime stream of payments for as long as you live. As with your defined-benefit pension, you can provide for heirs and beneficiaries when you annuitize. Your monthly annuity check will depend on the size of your Tax-Deferred Annuity account, the investment returns, your age and whether you provide for survivors.

If you are still working at age 59½ or older, you may make withdrawals from your TDA at any time without penalty.

Whenever you withdraw money from your TDA, you’ll have to pay taxes to the federal government and perhaps to your state and local government on the money you withdraw.

Whatever choices you make, we suggest you consult a tax adviser.

You can learn more about these choices by going to the TRS website or calling BERS at 929-305-3800.

You may also attend the union’s remote TDA workshop, where Pension Department representatives outline the basics of the TDA program, teach you the fundamentals of managing your account and show you where to find the right forms on the TRS website.

This column is compiled by Tom Brown, David Kazansky and Debra Penny, teacher-members of the NYC Teachers’ Retirement Board.