Optional Tax Deferred Annuities Program (TDA)

All full- and part-time employees of the District are eligible to participate in the Optional Tax Deferred Annuities (TDAs) Program. The same carriers that are approved for writing Optional Retirement Plans are also approved for writing TDAs.

Under these programs faculty and staff members may, through a salary reduction agreement, divert part of their compensation on a tax-free basis to the purchase of supplemental investment/annuity benefits. There are two types of investments.

The Internal Revenue Service places limits on the amount of salary which can be sheltered from taxes. The agent for the carrier selected will assist in calculating the maximum amount which can be sheltered.

Vehicles of the Internal Revenue Code:

403(b)(1) account which is with an insurance company

403(b)(7) account which is with a mutual fund company

To initiate a tax deferred program, eligible employees must enter into a salary reduction agreement which shall continue in effect without change until terminated by either the employee or the District.

The employee is not permitted to make more than one salary reduction agreement with the District during a single calendar year.

The amount of reduction permitted in salary reduction is governed by applicable provisions of the Internal Revenue Code and in general is 20% of "includable salary" multiplied by the number of years of service reduced by prior contributions; or $15,000, whichever is less.

Participation in the plan is only allowed through payroll deductions. Employees interested in participating should contact the Benefit Coordinator.

To terminate a salary reduction agreement, the participant needs to provide written notice of the date of proposed termination to the Benefits Office.

Because the tax breaks allowed under Section 403(b) of the Internal Revenue Code are designed to encourage people to save for retirement, the IRS restricts withdrawals from these accounts before age 59 1/2.

Tax Deferred Annuities FAQs