What is a Tax Sheltered Annuity (TSA)?

Overview

The CSU 403(b) Tax Sheltered Annuity (TSA) Program is a voluntary program that allows eligible CSU employees to save toward retirement by investing pre-tax contributions in tax-deferred investments in either annuities or mutual funds, under Internal Revenue Code (IRC) Section 403(b). TSA contributions are made solely by the employee through payroll deductions, prior to federal and state taxes being calculated. Consequently, these pre-tax contributions result in reduced taxable income for participating employees.

In order for eligible employees to enroll, a 403(b) account must be established with one of the TSA companies on CSU's authorized list. Employees may have up to two (2) TSA deductions per month, and salary reduction changes (stop, start, increase, and/or decrease) can be submitted to the Benefits Office by completing the 403(b) Salary Reduction Request form.  

Annual Contribution Limits

Currently, two IRC limits apply: the IRC Section 402(g) "elective deferral limit" and the IRC Section 415(c) "percentage of compensation" limit. For the 2008 tax year, the contribution limit is 100% of adjusted gross income (up to $46,000), or a maximum of $15,500 per year.

Contributions to a 403(b) plan are not offset by contributions to a 457 plan. For example, for tax year 2008, a participant could elect to contribute up to $15,500 to a 403(b) plan AND up to $15,500 to a 457 plan, for a total contribution of up to $31,000.

1. Contributions to a 403(b) plan are offset by any contributions to a 401(k) plan in the same tax year. Employees contributing to both a 403(b) and 401(k) plan are restricted by IRS regulations to a combined total of $15,500.

Additional Catch-Up Provisions

Under IRC Code Section 402(g)(7), employees that have at least 15 years of service (full-time equivalent) with the CSU and have not maximized the annual contribution limits during this time, may be eligible to contribute an additional $3,000 per tax year for up to five years, for a total of $15,000. To take advantage of this additional catch-up allowance, proof of 15 years of service (annual CalPERS statement) and a completed 15 Year Catch-Up Allowance Worksheet are required.

For 2008, the 15 year Catch-up Allowance Worksheet has been revised to calculate your annual maximum contribution amount based on information you provide. To take advantage of this new feature:

1. Double click onto the 15 Year Catch-Up Allowance Worksheet link.
2. Complete the yellow areas on the "Data Entry" tab.
3. Click onto the "Years of Service" tab and complete the yellow areas.
4. Click onto "Printout" to see your completed Calculation Worksheet. Print, sign and submit to your campus Benefits Office.

For years of service, you may refer to your annual CalPERS statement, or register on the My CalPERS website at: https://mycalpers.ca.gov to obtain your years of service with the CSU.

The age based catch-up allowance under IRC section 414(v). This provision allows employees that are or will turn age 50 by the end of the current tax year (December 31) to contribute an additional $5,000 to a 403(b) plan or to a 401(k) plan and also contribute an additional $5,000 to a 457 plan.

If an employee qualifies for both of the catch-up provisions, additional contributions will be first applied to the 15 year catch-up allowance and then to the age based catch-up provision.

More Information

For additional information regarding this program, including maximum contribution amounts, catch-up allowances, and administration of the TSA program, please refer to the 403(b), 457, and 401(k) Comparison Chart or contact the campus Benefits Office. 

Information regarding 401(k) and the 457 plans administered by the Department of Personnel Administration (DPA) Savings Plus Program, can be obtained from their website at: www.sppforu.com.

Return Home