Roth vs Traditional TDA: Which Is Right for You?

The TDA — TRS's Tax-Deferred Annuity — is one of the best perks in NYC teaching: a 403(b) retirement account that includes an optional guaranteed-return fund. When you contribute, you choose how your money is taxed: traditional or Roth. Here's the difference, and how to think about which one fits you.

The core difference: when you pay the tax

Traditional TDA: your contributions come out of your paycheck before taxes. You lower your taxable income now, your money grows tax-deferred, and you pay ordinary income tax when you withdraw it in retirement.

Roth TDA: your contributions are made with after-tax dollars — no break today — but qualified withdrawals in retirement come out completely tax-free, growth included.

Same account, same investment options; the only difference is the timing of the tax.

Who traditional tends to suit

Traditional often makes sense if you expect to be in a lower tax bracket in retirement than you are now, or if you simply want to reduce your taxable income during your peak earning years. Every dollar you defer is a dollar you're not taxed on today.

Who Roth tends to suit

Roth can be the stronger play if you're earlier in your career (a lower bracket now, with decades of tax-free growth ahead), or if you expect your retirement income — pension plus other savings — to keep you in a healthy bracket later. Paying the tax now locks in tax-free income for life.

A New York wrinkle worth knowing

Here's a local advantage: New York generally does not tax income from a New York public retirement system like TRS. That can soften the state-tax side of the traditional-vs-Roth question for NYC teachers, leaving the decision mostly about federal taxes. It's a real edge over private-sector savers — confirm exactly how it applies to your TDA with a CPA, but it's worth factoring in.

A few practical notes

• You can contribute up to the IRS annual limit — $24,500 for 2026 (it usually rises each year), with extra "catch-up" room once you're 50 or older.
• You don't have to choose just one — many teachers split their contributions between traditional and Roth.
• TRS's Fixed Return Fund offers a guaranteed annual rate (currently in the 7%–8.25% range, depending on your group), which is a big part of why the TDA is so popular. Check the current rate with TRS.

See where the TDA fits in your plan

Your TDA is one piece of a bigger picture — pension, Social Security, health coverage, and taxes all interact. Our free Retirement Roadmap folds your TDA into your whole timeline so you can see how it fits.