403(B)/ TSA Plans

A 403b plan is an employer sponsored retirement savings plan that is only available to employees who work for governmental, educational, and nonprofit organizations.

TSAs can be funded by employees and by employers with pre-tax dollars. The limits are the same as for 401K plans: $16,500 in deferrals in 2010, with an extra $5,500 if you are age 50 or older. There is a limitation on the amount that can be contributed. People who have been with an organization for more than 15 years can contribute additional funds. The method of funding is not automatic, unlike other qualified retirement plans. Also, Social Security taxes are due on the amount contributed.

Withdrawals are taxed as ordinary income in the year the money is withdrawn. Whether the withdrawal is also subject to a 10% penalty depends on the purpose (there is no penalty for withdrawal due to Hardship or Disability) and your age.

If you need cash, consider the alternatives before making a withdrawal or taking a loan from a TSA or any other retirement plan. We suggest that you read our information on handling a financial crunch.

On death, the proceeds are payable to your beneficiary. There are limitations on how a beneficiary receives the funds.

For more information, please see:

• The Definition Of A 403(B) Plan Also Known As A "TSA"  
• What Are The Benefits Of A 403B Plan?
  
• Limitation On The Amount Of Contributions To A TSA  
  
• If You Have Been With The Organization For More Than 15 Years  
  
• How Contributions To The Plan Are Made  
  
• Permitted Investments For Money In A TSA  
  
• Borrowing From A TSA  
  
• If You Become Disabled  
  
• If You Leave Your Employer Before Age 59 1/2  
  
• Withdrawals For Hardship 
  
• If You Retire Or Leave Your Employer And You Are Older Than Age 59 1/2  
  
• Forced Withdrawal Of Money From A TSA At Age 70 l/2  
  
• What Happens To The Money In A TSA If I Die? 

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