What is a tax-sheltered annuity?
A tax-sheltered annuity is a fund that allows you to accumulate tax-deferred cash for your retirement. Your TSA usually reduces your current taxable income. You may pay even less after you've retired because you may be in a lower tax bracket.
How does a TSA fund work?
Your monthly TSA contributions are invested by TRS. Net earnings are posted monthly and statements are mailed to you quarterly.
What are the requirements for participating in the program?
First, your employer (school district, institution of higher learning or other public agency devoted primarily to educational functions) must agree to deduct TSA contributions from your salary and remit it separately to TRS.
Secondly, you must be a member of TRS and be employed by a participating employer. You must sign a written agreement that allows your employer to deduct a specified amount of income.
How much can I contribute?
The Internal Revenue Code has set limits on the amount you can exclude from your income for tax purposes. The elective deferral limit for 2007 is $15,500 for participants under age 50. For participants age 50 or over the deferral limit is $20,500. This amount will increase by $500 each year. TRS advises you to consult with your tax accountant, financial planner or IRS Publications 571 or 575 prior to making annuity contributions. .
What if I have a tax-deferred plan somewhere else?
Funds from another qualified 403(b) annuity program, 401(K) or IRA may be transferred to the TRS program.
How are the funds invested?
The TRS investment portfolio includes a diversified mix of stocks and bonds. This balanced approach is used because of the conservative, long-term nature of the investments. For more information about our investments, see our Investment Portfolio Report.
What rate of return can I expect?
All participants share in the appreciation and depreciation of TSA's total investment portfolio. Net earnings are posted to accounts each month-end, based on the balance in the account as of the first day of that month.
The rate of return you earn each month will vary, depending upon changes in the market. There may be months when a loss is experienced, but the portfolio is designed to provide positive and meaningful returns over the long term.
How can I withdraw my funds?
Distributions from your account must be made in accordance with the Internal Revenue Code. Distributions of deposits made, or income earned, after December 31, 1988 will not be made except under one of the following circumstances: you reach age 59 1/2, death, disability, termination of employment, retirement or financial hardship. At any time, you may transfer your funds to another 403(b) TSA.
If I stop working in the Oklahoma public education system, what happens to my TSA contributions?
Your contributions may remain on deposit with TRS indefinitely (earnings will continue to accrue), be withdrawn, be transferred to another 403(b), or rolled over to an IRA or another eligible retirement plan.
What happens to my TSA in the event of my death?
Your spouse is entitled to the same privileges as you. All other non-spousal beneficiaries must begin taking distributions from the account by the end of the calendar year following your death.
When I retire, what options do I have?
At retirement, you may elect one of the annuity distribution options offered by TRS and subject to IRS requirements. They are: minimum distribution option, lump-sum surrender, life annuity option and partial lump-sum surrender. Additional information will be furnished upon request.
The summarized data in this FAQ is provided for general information only. If any conflicts arise between material in this FAQ and that of the law, the law takes precedence. For more detailed information about 403(b) tax-sheltered annuities, we advise that you consult IRS Publications 571 and 575, your tax preparers or a financial consultant.
