Voluntary Pre-Tax Programs
- TSA Company: Fidelity - 800-343-0860 www.netbenefits.com
- Savings Plus Program: Deferred Compensation (457) and Thrift Plan 401(k)
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 Office of Human Resources by completing the 403(b) Salary Reduction Request form.
The Internal Revenue Code (IRC) establishes specific limits that govern the amounts an individual can contribute to a 403(b) plan. As a result of the federally mandated Economic Growth Tax and Reconciliation Relief Act (EGTRRA). Currently, two IRC limits apply: the IRC Section 402(g) "elective deferral limit" and the IRC Section 415(c) "percentage of compensation" limit.
Tax Shelter Annuity Guidelines
NOTE: Please contact your tax advisor or financial planner for specific assistance in understanding the impact of federal and state taxes on your individual situation.
CSU Authorized 403(b) TSA Companies
In order for eligible employees to take advantage of the tax savings via payroll deduction, a 403(b) account must be established with one of the TSA companies on CSU's authorized list. The CSU Authorized Listing of 403(b) Companies will provide you with the addresses, phone numbers and links to participating TSA companies. A list of authorized TSA companies can be downloaded or provided by the Office of Human Resources.
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 2015 tax year, the contribution limit is 100% of adjusted gross income (up to $45,000), or a maximum of $17,500 per year.
Contributions to a 403(b) plan are not offset by contributions to a 457 plan. For example, for tax year 2015, a participant could elect to contribute up to $17,500 to a 403(b) plan AND up to $17,500 to a 457 plan, for a total contribution of up to $35,000.
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 $17,500.
Additional Catch-Up Provisions
15 year catch up
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 maximum contribution for this provision. 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.
Before utilizing the 15 year catch up provision, employees must have 15 years of service with the CSU system, and complete the 15 YEAR CATCH UP WORKSHEET. The worksheet must be completed in order to determine if you qualify for the 15 year catch up provision. Employees wishing to complete the worksheet may contact their Tax Shelter Annuity provider for assistance completing the contribution amounts on the worksheet.
Age 50 catch up
The age based catch-up allowance under IRC section 414(v), allows employees that are age 50 or will turn age 50 by the end of the current tax year (December 31), to contribute an additional $5,500 to a 403(b) plan or to a 401(k) plan and also contribute an additional $5,500 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.
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 Office of Human Resources.
IRC Section 402(g) (8) Catch-up
Employees who wish to contribute under the catch-up option must demonstrate eligibility by completing a Catch-Up Calculation Worksheet. This worksheet must be completed and submitted to the Office of Human Resources every year for which a participant wishes to contribute more than the annual 402(g) limit.
|$3,000 per year beyond the 402(g) limit, for up to 5 years or a lifetime maximum of $15,000.|
|IRC Section 414(v) Catch-up
Also referred to as the "over-age-50" catch-up. Permits employees who are at least age 50 by the end of a calendar year to make catch-up contributions on a graduated scale. An additional annual contribution, as noted in this section, is permitted even if the employee participates in another retirement savings plan, i.e., 401(k) or 457 plan(s), administered by the Department of Personnel Administration (DPA)--Saving Plus Program.
|$5,500 in 2011|
Enrolling in the TSA Program
Here are a few steps to follow in starting your enrollment with a TSA 403(b) company.
Step 1: Select the investment company(ies) with whom you want to invest. Remember, you may contribute with all five 403b companies, if you wish to, at any one time.
Step 2: Arrange a meeting or a phone conference with your selected TSA investment company(ies) representative or your personal tax advisor and:
- Decide how much you want to contribute and the pay period when you want your deductions to begin. The minimum contribution to your TSA account is $15 per month; however, some investment companies will have higher minimums you must meet.
- Ask the company to perform a maximum contribution calculation to verify that the amount you want to invest does not exceed your maximum annual permissible amount. You will have to provide certain information to assist them in preparing an accurate calculation. Ask for a copy of the calculation, Maximum Exclusion Allowable (MEA) for your records.
Step 3: Log onto the AIG Retirement Manager web site at: CSU Benefits Portal scroll down to the Retirement Savings Plans section, click on "Link to Retirement Manager" and type in your Unique ID (social security number) or select the "I'm a New User" link to set up your password. Select your investment company and enroll in the plan. For additional instructions, review the AIG Retirement Manager enrollment packet: Tax Shelter Brochure(PDF).
Step 4: Log onto the TSA Company you wish to invest with to set up an account if you are newly enrolled in the program.
Questions to Consider When Selecting a Tax-Deferred Contribution Plan
Several factors should be considered when choosing a tax-deferred contribution plan. Ask yourself the following questions to determine the best plan for you:
- What are the company’s fees and charges for handling a policy?
- When are the charges made and how are they assessed?
- When may I withdraw funds from my account?
- Are there any charges or penalties for withdrawals?
- Are participants permitted to transfer funds from the Fixed Annuity Account to a Variable Annuity Account, and vice versa? Are there any limits on the amount an individual may transfer? Is there a charge for transfer, and how often may an individual transfer?
- What is the current interest rate on fixed annuities?
- What has been the average rate on fixed annuities for the past five years?
- How have the variable annuities performed over the past five years?
- If I invest $100 per month in fixed annuities for 5, 10, 20, or 30 years, what would be my estimated retirement income?
- If I invest $200 per month in fixed annuities for 30 years, what would be my estimated retirement income?
- What are the options for drawing out funds when I retire? Am I penalized for withdrawing funds in a lump sum or in periodic payments for fixed numbers of years, as opposed to withdrawing the funds through an annuity?
- If I choose a monthly life annuity when I retire, what factor or formula would the company use to calculate my monthly annuity?
- How often will I receive a statement from the company?
- Is there a local representative for the company or will I need to deal long distance with the home office?
Saving Plus Program (SPP)
Deferred Compensation (457) and Thrift Plan (401[k])
As a state employee, you have other significant advantages for funding your retirement income. The Saving Plus Program offers two supplemental retirement plans: a 401(k) Thrift Plan and a 457 Deferred Compensation Plan.
They offer a wide variety of investment options with varying levels of risk. Information regarding participation in the voluntary 457 and 401(K) plans is available through:
Savings Plus Program (SPP)
To speak with a customer service representative, press *0.
TDD: (916) 327-4266
FAX: (916) 327-1885
Please refer to the 2015 Plan Comparison (PDF) for information regarding contribution limitations should you wish to concurrently participate in a Tax-Sheltered Annuity (TSA) plan. Part-time, seasonal, and temporary employees are not eligible to participate.
Changes to the Savings Plus Program:
The Savings Plus Program has a new administrator for 2013. For more information log onto: https://www.savingsplusnow.com/