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Questions & Answers About the Tax Sheltered Annuity
Program
What is a Tax Sheltered Annuity?
The Tax Sheltered Annuity Program is a supplemental retirement plan
authorized by Section 403(b) of the Internal Revenue Code of 1986, as
amended, and by Article 6228a-5, V.T.C.S. This program allows you to set
aside a portion of your salary before taxes to purchase an annuity or a
mutual fund from an authorized financial institution to supplement the
income you receive from your retirement plan (i.e. Teacher Retirement
System or Optional Retirement Program) when you retire.
What are the benefits of a Tax Sheltered Annuity?
You benefit from a Tax Sheltered Annuity or TSA by 1) systematically
saving pre-tax dollars, 2) reducing your current taxable income, and 3)
paying no taxes on the amount of salary set aside or on any earnings from
your investment until income is received from your investment, presumably
after retirement.
How much may I contribute to a Tax Sheltered Annuity?
You decide how much of your income you want to invest, but this amount
cannot exceed the 403B Plan contribution limits set by the
IRS.
How do I start a Tax Sheltered Annuity?
You may elect to begin a Tax Sheltered Annuity at a any time, preferably
by the 15th day of the month, provided all forms have been properly
completed and submitted to the Human Resources Office. This means you must
accomplish the following:
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Obtain a list from the Human Resources Office
(provided by UT System) of TSA companies allowed to offer annuity
products and mutual funds and select a company from the list. Go to http://www.utsystem.edu/ohr/tsaprov.htm
to obtain a list of participating companies.
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Contact the company you have chosen, request an
application form plus any information regarding your investment
options. Consult with your personal financial advisor or an investment
counselor/representative from the company you selected, if necessary.
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Once your account has been established, contact Human
Resources to schedule an appointment to initiate your payroll
deduction for the Tax Sheltered Annuity Program.
What happens to my contributions?
The payroll office will remit your monthly contributions to the company
you selected for investment in your choice of options. You will receive a
quarterly account statement from the company that summarizes your
account’s financial activity.
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403(b) Plan Contribution Limits |
| 2001 |
$10,500 |
| 2002 |
$11,000 |
| 2003 |
$12,000 |
| 2004 |
$13,000 |
| 2005 |
$14,000 |
| 2006 |
$15,000* |
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Age 50+ Catch-up Contribution Limits |
| 2002 |
$1,000 |
| 2003 |
$2,000 |
| 2004 |
$3,000 |
| 2005 |
$4,000 |
| 2006 |
$5,000* |
| * After 2006, these limits are indexed
for cost-of-living adjustments in $500 increments. |
May I change the amount I contribute?
Yes, you may increase or decrease your contributions every 90 days. You
may stop payments at any time, but are not allowed to reinitiate your
participation until 90 days has lapsed.
May I change companies if I become dissatisfied with
the service?
Yes, you are allowed to change TSA companies every 90 days, but no more
than twice a year.
To enroll in the TSA program or for further information,
contact Christina Logan at 544-8809.
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