What is a Tax Sheltered Annuity (TSA) plan?
A tax-sheltered annuity plan is often referred to as a “403(b) plan.” Under Section 403(b) of the Internal Revenue Code, employees of non-profit institutions and public schools can set aside money for retirement on a pre-tax basis through a plan offered by their employer. To encourage saving for retirement through these plans, the federal government created special tax advantages for 403 (b) contributions. How does a 403(b) plan work? Under the guidelines of the IRS Publication 571, you decide the amount of money you want to contribute to the plan during each pay period, up to a pre-determined maximum amount (the IRS sets annual dollar limits). The IRS has approved the use of three general types of investment vehicles for TSA contributions. They include Annuities issued by insurance companies, Mutual Funds, Variable Annuities and Life Insurance. A combination of one or more of the products may be used depending upon your financial objectives. Your 403(b) contribution is deducted from y
