When
can I make any withdrawals from a TSA?
At age 59 1/2, or 55 if you are separated from service. IRS
imposes penalties for withdrawal prior to age 59 1/2.
Is
there any access to the TSA account?
Yes, most TSA's allow you to borrow by using the TSA as collateral,
without incurring any taxes or penalties.
When
are taxes paid on a TSA?
When the funds withdraw, and as "ordinary income" in the year you
receive them.
Do
I have any options regarding withdrawals?
Several options are available:
Lump Sum
Monthly, quarterly or annual payment
Payments for certain periods
Payments for certain amounts
Lifetime payments
What
happens to the TSA if I die?
The named beneficiary will become the new owner of the account.
The TSA proceeds are not subject to probate.
2002 UPDATE:
How
much can I contribute into my TSA?
With
the passage of EGTRRA (Economic Growth and Tax Relief Reconciliation
Act of 2001 - effective 6/7/2001) two significant changes occurred;
namely, an increase to contributions and enhanced flexibility on
portability.
CONTRIBUTIONS:
The MEA or Maximum Exclusion Allowance is repealed for limitation
years beginning January 1, 2002. The new contribution limits
for 403(b) plans are now the lesser of:
-
$40,000
or 100% of the employee's compensation - Annual Addition Limit.
-
$11,000
- Elective Deferral Limit.
Those
participants turning age 50 by 12/31/2002 are allowed a catch-up
contribution of the lesser of $1,000 or their includible
compensation less their actual deferrals for the year in addition to
their normal contribution.
PORTABILITY/ROLLOVERS:
Eligible rollover distributions are no longer limited to an IRA or
another 403(b) and now also include: 457(b); a qualified plan
under 401(a), or another 403(a) qualified Annuity (NOTE: there
remain the following non-eligible rollover distributions: SEPP -
Substantially Equal Periodic Payments; RMD - Required Minimum
Distributions; hardship distributions; excess contributions;
defaulted loans; and PS 58 costs).
How
Does A TSA Compare To An IRA?
(See
Chart Below)
