Employee Matters

This column is prepared by staff of the Employee Compensation and Benefits Services office. E-mail the office at employee@bussvc.wisc.edu, or call 263-7556 or 262-5650.

Using a Tax-Sheltered Annuity

What is the Tax-Sheltered Annuity (TSA) program?
It is a supplemental retirement savings program that started in 1977 and is authorized by section 403(b) of the Internal Revenue Code. This program is specifically for employees of educational institutions, churches and some non-profit agencies and allows eligible employees to invest in a retirement savings account on a pre-tax basis. There is no employer contribution.

Who is eligible?
Classified staff, unclassified faculty and academic staff, students and rehired annuitants.

What investment options are available?
UW–Madison’s Tax-Shelter Review Committee screens the TSA vendors offered for payroll deductions to ensure that the companies all meet a minimum set of standards. There are nine companies in the UW TSA program with more than 350 fund options; you are not limited in the number of investment options that you choose.

There are three categories of vendors offered:

• Mutual funds: Conservative to aggressive funds offering stock, bond and money-market investments.
• Insurance companies: Annuities with variable and fixed rates of return.
• Wisconsin Retirement System: Fixed and variable funds.

Why participate?
Consider enrolling if you want to save for retirement on a tax-deferred basis and reduce taxable income while saving money. Contributions are portable within the program without tax penalty.

What’s the contribution minimum and maximum?
You can participate by contributing as little as $8 per payroll period if you are paid biweekly or $20 per month if paid monthly. There is information on our Web site that describes the maximum contribution amount: http://www.uwsa.edu/hr/benefits/retsav/limits.htm.

How much should I contribute?
Some easy-to-use worksheets are available online, and most vendors have worksheets to help you calculate your savings goal. Visit http://www.uwsa.edu/hr/vendors.htm.

Can I increase, decrease or stop my contributions throughout the year?
Yes. TSA contributions can be changed any time by completing a Salary Reduction Agreement (SRA).

Does a TSA affect other benefits?
No. Contributions to a TSA do not affect Social Security or Wisconsin Retirement System benefits.

Are there fees to participate?
Yes. The UW charges $9 a year for administrative costs. This fee is deducted when you start a TSA and, thereafter, each March. Some vendors also have fees. The UW TSA Review Committee has set maximums for most of these.

How do I enroll?
Select a vendor(s) and contact them to request a UW TSA packet. Complete vendor(s) enrollment form(s). Several vendors offer online enrollment to expedite your application. Complete a Salary Reduction Agreement and submit to your benefits coordinator.

Questions?
Contact a benefit specialist at employee@bussvc.wisc.edu.