аЯрЁБс>ўџ 79ўџџџ6џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅСM јП&bjbjт=т= $€W€W#џџџџџџl```tHHHH Tt2*|’’’’ЅЅЅезззззз\ |hз`ЅЁЅЅЅзс’’ьсссЅ8’`’есЅесЪсЋr)|H`С’p №Ы+йУtдHЕЅС02ГфХфСсttйFoothill-De Anza Community College District Payroll Services Frequently asked questions regarding Tax Sheltered Annuity (403b) plans. What is a Tax Sheltered Annuity (TSA) plan? A tax-sheltered annuity plan is often referred to as a "403(b) plan." Under Section 403(b) of the Internal Revenue Code, employees of non-profit institutions and public schools can set aside money for retirement on a pre-tax basis through a plan offered by their employer. To encourage saving for retirement through these plans, the federal government created special tax advantages for 403 (b) contributions. How does a 403(b) plan work? Under the guidelines of the IRS Publication 571, you decide the amount of money you want to contribute to the plan during each pay period, up to a pre-determined maximum amount (the IRS sets an annual dollar limits). The IRS has approved the use of three general types of investment vehicles for TSA contributions. They include Annuities issued by insurance companies, Mutual Funds, Variable Annuities and Life Insurance. A combination of one or more of the products may be used depending upon your financial objectives. Your 403(b) contribution is deducted from your pay before income taxes are taken out. You may submit multiple salary reduction agreements during the year that are consider reasonable. You don't owe income taxes on your contributions, or any earnings on those contributions, until you withdraw from the plan. Who may establish a 403(b) plan? Any contract employee of the Foothill-De Anza College District is eligible to participate in the plan through a payroll deduction. How to get a payroll deduction form? A payroll deduction form, referred as Salary Reduction Agreement, can be acquired through three different sources: Part-time Payroll Office at each campus District Payroll Services office Internet Web page: http://business.fhda.edu/payroll/forms What is the Maximum Exclusion Allowance (MEA)? The Maximum Exclusion Allowance, or MEA, is a calculation based on your compensation, years of service, and your previous contributions to your current retirement plan. For employees who have worked for the District for over 15 years, there are special catch-up provisions, which allow employees to make higher contributions than the normal yearly limits to make up for previous years in which they contributed less than they were permitted. For the year 2004, the maximum general limit is $13,000, or $16,000 if you qualify for the 15-year rule. For employees who will have reached age 50 by the end of the year can contribute an additional amount of $3,000 per year. Your MEA may be less than the pre-determined maximum amount set annually by the IRS. Please be advised that TSA is your own personal business and the District will not provide advice on your investment elections, nor will the District assist you in performing your MEA calculation. Moreover, the District will not endorse any TSA vendor; however, our District accepts 403(b) deductions from any new or existing vendors. For more detail information, please consult with your financial advisor or IRS Publication 571 – Tax Sheltered Annuity Programs for Employees of Public Schools and Certain Tax Exempt Organizations. What is the 403b withdrawal regulation? Once you withdraw funds from your retirement plan, your distribution is subject to ordinary income taxes. If you have a 403(b) account and you withdraw money from your account before you reach age 59 1/2, there may be a 10% early-withdrawal penalty payable to the IRS on any pre-tax amount withdrawn. In addition, your distribution will be subject to mandatory 20% federal income tax withholding unless the entire withdrawal is rolled over directly to another qualified retirement plan or IRA. Are there exceptions to the distribution penalty? According to the IRS, a 10% premature withdrawal penalty can be waived if employee: Reaches age 59 1/2, Separates from service, Dies, Becomes disabled, or In the case of salary reduction contributions, encounters financial hardship. How to get more information? IRS Publication 571 – Tax Sheltered Annuity Programs for Employees of Public Schools and Certain Tax Exempt Organizations IRS Publication 575 - Pension and Annuity Income, IRS Publication 590 - Individual Retirement Arrangements (IRAs) IRS Publication 910 - Guide to Free Tax Services, These publications are available from the IRS upon request. It contains free tax information, IRA, Pension and Annuity related topics. You may access the IRS Web page on the Internet at  HYPERLINK http://www.irs.gov www.irs.gov; contact (800) 829-3676 ordering forms, and publications; or call (800) 829-4477 to listen to pre-recorded messages covering various topics. 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