tax sheltered annuity

Working a public sector job is rewarding in many ways, unfortunately few of which are monetary. However, tax-sheltered annuities (TSAs) are the rare exception to the rule. Often called the 403(b) plan after its corresponding section in the Internal Revenue code, this is an employer-sponsored retirement savings program available to certain public sector workers.

You may be eligible for a tax-sheltered annuity if you

• Teach at a public school, college or university.
• Work for a non-profit organization.
• Are employed by a charitable organization such as a church.

If you qualify for a TSA, there are two ways to pay into it:

1. Elective Deferrals: These are employee contributions which are deducted from the participant's paycheck and forward on to the fund's managers before taxes. Most TSAs are elective deferrals.
2. Non-Elective Deferrals: These are any contributions that come from your employee.

If you qualify, the benefits of a TSA or numerous:

• You may borrow against your TSA in case of emergencies.
• You are only taxed on the portions of your paycheck that do not got towards your TSA.
• Maintaining and installing a TSA plan is fairly simple and straightforward.
• Powerful tax breaks provided by Congress allows your money to work harder for you.
• Supplement retirement income.

 

Compare Tax Sheltered Annuities with other types of ( ANNUITIES )