Tax-Sheltered Annuity

A tax-sheltered annuity (TSA) is a retirement savings plan offered by many employers. TSAs allow employees to save money from their paychecks before taxes are taken out. This means that the money grows tax-deferred, which can help you save more for retirement.

There are two types of TSAs: traditional TSAs and Roth TSAs. With a traditional TSA, you make contributions with pre-tax dollars. This means that you can deduct your contributions from your taxable income. With a Roth TSA, you make contributions with after-tax dollars. This means that you do not get a tax deduction for your contributions, but your withdrawals are tax-free in retirement.

TSAs have several advantages over other retirement savings plans. First, the money in a TSA grows tax-deferred, which can help you save more for retirement. Second, TSAs are portable, which means that you can take them with you if you change jobs. Third, TSAs are generally well-regulated, which provides you with some peace of mind.

However, there are also some disadvantages to TSAs. First, you may have to pay an early withdrawal penalty if you withdraw money from your TSA before you reach age 59 1/2. Second, TSAs have contribution limits, which means that you can only contribute a certain amount of money each year.

Overall, TSAs can be a good option for saving for retirement. However, it is important to weigh the pros and cons before you decide whether or not to open a TSA.

Here are some additional details about TSAs:

* The maximum contribution limit for a traditional TSA is $20,500 in 2023. The maximum contribution limit for a Roth TSA is the same as the annual contribution limit for a Roth IRA, which is $6,000 in 2023.
* You can contribute to a TSA as long as you are working and under age 70 1/2.
* TSAs are subject to required minimum distributions (RMDs). RMDs are the minimum amount of money that you must withdraw from your TSA each year after you reach age 70 1/2.
* TSAs are offered by many employers, but not all employers offer TSAs. If your employer does not offer a TSA, you may be able to open a TSA through a bank or brokerage firm.