Q.: I am 47 and plan to retire at 62. I have been contributing to the Roth feature of the Deferred Compensation 457(b)/401(k) Plans of the City of New York for as long as it has been offered. At retirement I plan to roll over the two Deferred Compensation Roth accounts to a NYCE Roth IRA. After the two rollovers are executed, does the 5-year rule start up again? D.S.

A.: Yes it does, and this is why I urge you to open up your NYCE Roth IRA now. At retirement, you will be older than 59.5 and the Roth IRA will be older than 5 years. Upon retirement, you will have satisfied the two requirements for making tax-free withdrawals from your NYCE Roth IRA.

Q.: After all these years of being legally allowed to adopt a Roth option to its Tax-Deferred Annuity Program, the Trustees of the Teachers' Retirement System remain steadfastly against it. Why? The Trustees are well aware of the fact that investing "pre-tax" guarantees the long-term TDA investor substantially more taxable income after age 72, when Required Minimum Distributions kick in. The Trustees are also aware of the fact that, as we age, the annual RMD is larger than the year before because, as we age, our life expectancy is less than the year before. The Trustees also know the survivor of a married couple that filed jointly must now file as a single taxpayer, where the rates are the highest. Why are the Trustees so stubborn? P.H.

A.: Their stubbornness baffles me also. I urge you to show your displeasure by writing to them. Please share their answer with me.

How much longer are you going to wait for the Trustees to see the light? As you wait, your future tax bill is getting larger and larger. I advise you to trash the TDA plan in favor of investing after-tax in the Roth program of the Deferred Compensation 457(b)/401(k) Plans of the City of New York.

Q.: My final retirement distribution from the NYCERS will be $100,000. $67,000 will be taxable funds and $33,000 will be tax-free funds. I will be rolling over the $67,000 to a NYCE IRA. What do you suggest I do with the tax-free portion of $33,000? R.G.

A.: Roll it over to a NYCE Roth IRA.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by phone at (732) 536-9472, or via email at rollover@optonline.net.

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