Guidelines For Tax-Sheltered Annuity/Deferred Compensation Plans

A comfortable retirement probably means relying on more than just your main retirement plan and social security. A tax-sheltered annuity and/or a tax-deferred compensation plan are excellent vehicles to defer income taxes and build retirement income exclusive of your contributions to either the Teachers Retirement System of Georgia (TRSGA) or the University System of Georgia's Optional Retirement Plan (ORP).

Institutions of the University System of Georgia are authorized through Board of Regents policy 802.13, to enter into tax-sheltered annuity plans and are authorized to enter into deferred compensation plans to make available for employees a non forfeitable annuity contract and /or a non forfeitable deferred compensation contract. Theses provisions are allowed under Internal Revenue code, Section 403(b) and Internal Revenue code, Section 457(b), respectively.

In a voluntary 403(b) tax-sheltered annuity plan or a voluntary 457(b) deferred compensation plan, retirement contributions are made exclusively by the employee. There are no contributions by the employer. The employee contributions are pre-tax.

As a result of the Economic Growth and Tax Relief Reconciliation Act of 2001, effective in 2002, these plans have become more attractive for eligible employees. Changes enable employees to save more for retirement while lowering their current taxable income even further.

Employee contribution limits for a 403(b) plan have been increased to $15, 000. The employee contribution limits for 457(b) plans used by state and local government employees have increased to $15,000. With the passage of the Tax Relief Act of 2001, University System of Georgia employees are able to double their pre-tax employee savings limit by participating in both a 403(b) and a 457(b) plan. Also, under the Tax Relief Acts of 2001, older workers will be allowed to contribute more than the normal limits. Employees aged fifty and older who have not saved enough for retirement may "catch up" on their contributions.

Augusta State University does not recommend companies or endorse their respective investment options. ASU does not monitor companies performance and/or their financial stability.

All employees are advised not only to discuss their respective investment opportunities with the company representative but with a qualified professional such as a financial planning consultant or tax attorney. When considering a plan be sure to inquire as to prospective fees. Fees come under different names but they all deduct money from your investments. Fees or charges may be called by many names to include: front end load fees, administrative fees, management fees, account opening fees, annual maintenance fees, exchange fees, surrender fees, etc. Fees may be charged on a percentage basis and on a flat rate. Please be sure you understand the companies arrangements before signing agreement forms.

The ASU payroll department will accept salary reduction agreements only for the approved annuity companies listed below. Salary reduction agreement forms must be completed to start, amend, or cancel existing tax-deferred annuity accounts. These transactions can be accomplished at any time during the year (through payroll services) and are not dependent on open enrollment period.

How To Enroll With Tax-Sheltered or Deferred Companies:

To enroll with a tax-sheltered or deferred plan, Augusta State University employees are encouraged to contact the approved companies listed below. Enrollment documentation forms will normally be provided by the respective companies. (If there is a problem in receiving these forms, contact Personnel Service at 737-1763). After selection of investment companies, etc., paperwork should be taken to the Payroll Office in Fanning Hall. At this point you will sign a "salary reduction form". The form is available on the HR website (www.aug.edu/personnel).

ANNUITIES AVAILABLE THROUGH PAYROLL DEDUCTIONS AT AUGUSTA STATE UNIVERSITY

403(b) companies

Lincoln National Life Marilyn Chester (478) 477-4055 or 1-800-254-6265

TIAA/CREF Teachers Insurance & Annuity Association (212) 490-9000

USAA USAA Life Insurance 1-800-531-8292

VALIC Eric Swierski (706) 737-2435

Fidelity 

457(b)companies

VALIC Eric Swierski (706) 737-2435

TIAA/CREF James Kelley (1-800-842-2003)

*There is an Institutional Policy that requires companies to enroll and maintain a minimum of ten employees (contributions) in the respective plans in order to continue or enroll new members. Please check with Personnel Services and /or Payroll Services to be sure these minimums are fulfilled.