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The 403(b) Tax Sheltered Annuity (TSA) plan is a tax
advantage savings program, available to employees of public educational
organizations and certain non-profit organizations, designed to encourage
employees to save for retirement with pre-tax dollars. Contributing to a
TSA is convenient because it is done through payroll reduction. This
means that the money you save today is tax-deferred and each dollar you
contribute lowers your current taxable income.
With
a Tax Sheltered Annuity you can save as little as $50 per month or as
much as $15,500 per year, beginning January 1, 2007. If you are over age
50, you may contribute an additional $5,000. Long service employees may
be eligible to contribute even more. You may elect to adjust the amount
contributed to the plan on the first of any month. All contributions and
growth on the contributions are tax-deferred until the time that that
they are withdrawn. Contributions and growth are treated as taxable
income when withdrawn.
You may begin
withdrawals once you have attained age 59 ½. The rules require that you
begin making minimum withdrawals once you reach age 70 ½. If you separate
from service (retire) at age 55 or older, the plan permits you to
withdraw money as well. These are general rules with important
exceptions. Money withdrawn prior to age 59 ½ may be subject to a 10% IRS
penalty.
Many Fixed Annuities and Variable Annuities have a low
interest rate loan feature. Many custodial type accounts permit loans as
well. Details of loan provisions are available for each plan.
Current
rules allow TSA contributions to be placed in Fixed Annuity Plans, Variable Annuity Plans*, or A Mutual Fund 403(b)(7)
Custodial Account, which can hold Mutual Fund* shares.
*For more
information about mutual funds and variable annuities, including
investment objectives, fees and expenses, contact your financial
representative or visit www.lincolninvestment.com for a current prospectus.
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