403(b) Tax Sheltered Annuity

As an employee of AURA, a not-for-profit research institution, you are eligible to establish a 403(b) Tax Sheltered Annuity (TSA). This account is distinct from your AURA 401(a) Money Purchase Pension Plan account.

The TSA is funded entirely through pre-tax or post-tax (Roth) employee contributions. The amount of money you may contribute is calculated according to IRS regulations. Most employees may not contribute more than $18,000 per year (for the year 2016). Certain “catch-up” provisions allow those over 50 years of age who meet certain eligibility qualifications to set aside an additional $6,000 (for year 2016). It is important for you to know that there may be limits on the total of all your tax deferred compensation plans. You should consult a tax professional regarding your individual situation and the limits that apply. You may elect to contribute any amount up to your maximum.

You may invest your contributions in funds offered to AURA employees by either Fidelity Investments or Teachers Insurance Annuity Association/College Retirement Equity Fund (TIAA/CREF.). Both companies offer a broad assortment of investment opportunities, ranging from aggressive to conservative. Be sure to review the companies’ web sites, fund prospectuses (often available online), and other literature before making investment decisions. You have the flexibility to make changes to the funds or direct future funds to the other company.

There are provisions for borrowing against your TSA if the funds are deposited with TIAA/CREF. Loans are not allowed from the accounts with Fidelity Investments.

In regard to withdrawals, pre-tax contributions and their earnings will be taxable at withdrawal. Post-tax (Roth) contributions and their earnings are untaxed in retirement if you participated for at least 5 years and are age 59½. An additional penalty will be assessed if you withdraw the funds prior to age 59 ½.

As with any issue involving your individual tax situation, we suggest you consult with your tax professional.