Tax-Sheltered Annuities [403(B) Plan]

As an eligible District employee, you may participate in a special tax-sheltered savings plan. This plan, known as a 403(b) or a tax-sheltered annuity (TSA), has several advantages over individual retirement accounts (IRAs). There are two significant advantages to TSAs:

• You may contribute more to a TSA than you can contribute to an IRA.
• Your TSA contribution reduces your taxable income so you pay less in taxes and it may help you qualify for the maximum deductible IRA contribution, should you decide to also establish an IRA.

How TSAs Work

To participate in a TSA, you contribute a portion of your pay to your annuity fund through automatic payroll deductions. When you participate you benefit from two tax advantages:

• Contributions are made before state and federal taxes are calculated.
• TSA earnings are not subject to taxes, as long as the money remains in the fund.

These two tax advantages make the TSA a good way to save for retirement, separate from any other retirement plan established by the District or the state, or any other retirement savings plans you may have arranged.

For More Information About TSAs