TSAs (Tax-Sheltered Annuity) (403b)

A 403(b) tax-sheltered annuity is a pre-tax salary deferral retirement plan, similar to a 401(k) plan, but offered by public schools and certain 501(c)(3) tax-exempt organizations. Plan contribution choices include:

• Elective-deferral contributions deducted from employee's paychecks on a pretax basis;
• Employer contributions that can be fixed or discretionary, or;
• After-tax contributions that are deducted from employee paychecks on an after-tax basis.

As in a 401(k) plan, the employer determines which regulated financial institutions will maintain its 403(b) account, including mutual funds and other investment options or annuities. The employer is responsible for seeing that its plan complies with all legal requirements, and should verify that there is no conflict between its 403(b) plan and any annuity contract or custodial account agreement under the plan — with the plan's terms overruling any inconsistencies.

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