Office of Human Resources - Benefits Design & Management

Tax Sheltered (TSA)

A 403(b) Tax-Sheltered Annuity (TSA) is similar to other pre-tax savings programs, such as a 401(k), allowed under the Internal Revenue Code. You pay no current federal or state income taxes on the amount you contribute, or on the interest or dividends that are earned. No income taxes are paid until distribution is made. You have two choices in placing your funds:

  • a 403(b)(7) custodial account (mutual funds), or
  • a 403(b)(1) annuity contract (traditional annuity)

The annual contribution limit is 100% of your compensation to the following maximums:

  • If you are age 49 or younger you can contribute $15,500 in 2007 and in 2008.
  • If you are age 50 or older you can contribute $20,500 in 2007 and in 2008.
  • If you have been employed at the university for 15 or more years, you may be eligible to defer an additional $3,000 a year for no more than five years.

Employees can make contributions to a 403( b) program and a 457, putting up to the maximum dollar amount into each account. These contributions are NOT matched by the university.

Eligible employees
Any employee of the university (full-time, part-time, hourly, temporary) is eligible to participate in the 403(b) plan. You must be able to contribute a minimum of $200 per year.

Choosing a company
Select one or more companies from the authorized TSA Companies list.
The companies on the list are authorized to receive payroll reduction (pre-tax) contributions. The authorization does not imply any endorsement of company stability or of the products that are offered. Companies that have agreed to abide by the sales practices and disclosure guidelines, and who have enrolled 20 or more employees (during an initial sales period) in their program have received authorization.

Each of the companies on the list will, with a phone call, provide prospectuses and related company information.

Enrolling in more than one company
You may enroll in more than one 403(b) program provided the name of each company and the amounts to be contributed are listed on separate ASU Salary Reduction Agreements (SRA) that you submit to Human Resources

Starting, resuming, increasing, decreasing or stopping contributions
You may start, resume, increase, decrease or stop contributions effective the beginning of any future pay period.

Starting contributions to a new account:

  • Submit an ASU SRA to ASU HR Employee Service Center (ESC)
  • Include a copy of the completed enrollment application that you have submitted to the TSA company you have chosen, OR an authorized TSA agent's signature at the bottom of the SRA form.

Increasing and decreasing contributions:

Stopping contributions:

  • Submit an ASU SRA indicating a zero dollar payroll deduction.

Resuming contributions to a still active account:

  • Submit an ASU SRA to ESC

Options when employee leaves the University
You have three choices:

  • You can leave the money with the current company and it will continue to earn interest/dividends, or
  • You can do a partial or total tax-free exchange (e.g., roll some, or all, of the money to another tax qualified account) at any time, or
  • You can withdraw some, or all of the funds. If you elect to withdraw funds, the monies are treated as income and subject to taxation in the year withdrawn. In addition, if you are under age 59 1/2, you will owe an additional 10% federal surcharge/penalty tax for early withdrawal of retirement funds.

Can I withdraw my money at any time?
No; monies contributed after December 31, 1988 may be withdraw only under the following circumstances:

  • Attainment of age 59 1/2
  • Disability
  • Separation from service
  • Death
  • Hardship. Qualifying reasons for a hardship withdrawl includes funeral expenses, education expenses, purchase of home, or excess medical expenses. If funds are withdrawn due to a hardship, you are not permitted to defer additional funds for a period of six months.