A tax sheltered annuity, commonly referred to as a TSA, is a payroll deducted retirement savings program allowed under section 403 (b) of the Internal Revenue Code. This special program is only available to employees of public schools, colleges, universities, and other nonprofit organizations.

What are the advantages of having a TSA?

Before tax contributions!
TSA contributions immediately reduce your current income taxes! The amount you contribute is not reported as taxable income on your W-2 to the IRS. For example if you contribute $4,000 of your $36,000 salary. Only $32,000 is reported to the IRS, which reduces your taxable income.

Tax deferred growth!
TSA contributions earn tax-deferred interest, which helps your annuity earn more. When your earnings aren't eroded by taxes each year they compound faster. As the chart below points out you can accumulate significantly more in a TSA than you would in a comparable taxable investment.

The chart above compares the results of a $2,000 annual investment in a taxable account in which both the principle and earnings are taxable at the 28% Federal Tax rate to a pre-tax $2000 annual investment in a 403 (b) TSA. This hypothetical example is based on a fixed annual return of 8% and no policy loans or withdrawals.