Tax Sheltered Annuities
What is a tax-sheltered annuity?
It is an optional retirement savings program, in existence since 1977, authorized by section 403(b) of the Internal Revenue Code specifically for employees of educational institutions, churches and some non-profit agencies. It allows eligible employees to invest in a retirement savings account on a pre-tax basis. There is no employer contribution.
The University of Wisconsin Tax-Shelter Review Committee screens TSA vendors and authorizes deductions for plans that meet established standards. There are 6 companies in the UW TSA Program with more than 350 options; you are not limited in the number of investment options that you choose.
Who is eligible?
Classified (permanent, project and LTE workers), unclassified faculty and academic staff, students and rehired annuitants are eligible. Research assistants, employees-in-training, fellow and interns are not eligible.
What options are available?
- Mutual funds: Conservative to aggressive funds offering stock, bond and money market investments.
- Insurance companies: Annuities with variable and fixed rates of return.
- Wisconsin Retirement System: Fixed and variable funds.
Why participate?
Consider enrolling if you want to save for retirement on a tax-deferred basis and reduce taxable income while saving money. Contributions are portable within the program without tax penalty.
What's the minimum contribution?
You can participate by contributing as little as $8 per payroll check for employees paid bi-weekly or $20 monthly for employees paid on a monthly basis.
Where do I find information on an annual limit?
Information is posted on the University of Wisconsin System Administration (UWSA) website.
How much should I contribute?
Some easy-to-use worksheets are available on the Internet, and most vendors have worksheets to help you calculate your savings goal.
Can I increase, decrease or stop my contributions?
Yes. TSA contributions can be started, stopped or changed at any time by completing a Salary Reduction Agreement.
Does a TSA affect other benefits?
No. Contributions to a TSA do not affect Social Security or Wisconsin Retirement System benefits.
Are there fees to participate?
Yes. The UW charges $9 a year for administrative costs. This fee is deducted when you start a TSA and, thereafter, each March. Some vendors also have fees. The UW TSA Review Committee has set maximums for most of these.
What do I do next?
- Select a vendor(s) and contact them for a UW TSA packet. Complete vendor(s) enrollment form(s) and submit to vendor.
- Complete a Salary Reduction Agreement and submit to your benefits coordinator.