Frequently Asked Questions About 403b Tax Sheltered Annuities:

Q:  What is a 403b Retirement Savings Account? (Also known as Tax Sheltered Annuities, TSA)

AA 403b is an automatic savings plan that that you can set up through your payroll department that allows you to save for retirement before state or federal taxes. (tax deferred)

Q:  Who is eligible?

A:    Employees of religious, charitable, educational, scientific, and literary organizations described in IRC Sec. 501 (c)(3) or public school systems.

Q:   How much can be contributed?

A:   
     
Year       Annual Contribution      Age 50+ catchup
2012       $17,000                      $5,500
2013       $17,500                      $5,500
2014       and after increased by COLA
 
  

Q:  When can a 403b Retirement Savings Account be set up?

A:   At anytime during the year; however, the salary reduction agreement must be entered into before the retirement savings reductions are taken.

Q:   What may the funds be invested in?

A:     Funds may be invested in either Annuities (fixed or variable and individual or group) or Custodial accounts invested in mutual funds.

Q:   Can 403b funds be borrowed?

A:    Participants can borrow funds from their 403b and later restore them without incurring a tax or penalty, if established conditions are met regarding maximum loan amount, amortization requirements, time period for repayments, etc.

Q:  What is the penalty for early withdrawals?

A: There is a 10% penalty for early withdrawal of qualified retirement funds prior to age 59 ½ and all withdrawals are taxed as ordinary income, unless the distributions is rolled-over to another qualified retirement plan. Other exceptions, if the annuitant is totally disabled, separates form service (after age 55), or dies. Also, the salary reduction amounts (but not the earnings) are available for "financial hardship" e.g., an immediate and heavy financial need which cannot be met with other assets.

 

END RESULT:

1. The employee avoids current income taxation on deferred amount (except it is

included in the Social Security base.).

2. The earnings on the accumulating funds are not taxed until they are distributed.

3. 403b's offer financial security and investment growth.

4. 403b Income doesn’t reduce other Retirement Benefits.

5. 403b's offer flexible payment options.

6. Earnings accumulate tax deferred in a 403b.

 

When it comes to 403b's, other annuities or investments in mutual funds, The Logan Group can offer you a product that will meet your financial objectives.


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