What are the Advantages of Having a TSA/403b?

What are the Advantages of Having a TSA/403(b)?

It "forces" you to save, to put money aside for your future retirement use through the convenience of payroll deduction.

The payment of federal and state income taxes is deferred until you withdraw money from your plan.* Your tax rate during retirement may be lower than your current tax rate. During your retirement, you may live in a state which does not have an income tax or may have a lower tax rate than the one in which you currently pay taxes.

The investment income (interest, dividends and capital gains) earned in your TSA plan is not taxed until you begin withdrawing during retirement. Thus, the full amount of investment income is being reinvested in the plan -- the compounding effect is much greater.

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Remember, the income earned will be taxed at the time it is withdrawn, along with the money you contributed.

Hypothetical

	Savings	TSA
Monthly Amount	$100	$100
Federal Tax (28%)	$28	$0
State Tax (5%)	$5	$0
Net Contribution	$67*	$100

*Withholding options will affect this amount.

*Penalties may apply to withdrawals made prior to age 59 1/2 These rules are complex and contain many conditions and exceptions. Therefore, it is suggested that you consult with a professional tax advisor before you take a withdrawal from your retirement plan. You can find more specific information on the tax treatment of payments from qualified retirement plans in IRS Publication 575 and IRS Publication 590. These publications are available from your local IRS office or by calling 1-800-TAX-FORM.

Other IRS Publications referred to herein, can be found at: http://www.irs.ustreas.gov