What is a 403(b) Tax Deferred Annuity?
A 403(b) Tax Deferred Annuity (TDA) is a voluntary retirement program available to employees of public schools and certain tax-exempt organizations under Section 403(b) of the Internal Revenue Code. It provides an opportunity to use pretax dollars for retirement planning. Through a TDA, you can set aside a portion of your pay through salary reductions and invest those pretax dollars in one or more investment options. As its name suggests, you don’t pay federal income tax on the salary you defer, or any investment earnings on those contributions, until you take a distribution. When you do begin receiving funds, usually at retirement, you may be in a lower tax bracket.
