403(b) Tax Sheltered Annuity (TDA) Plan Overview
In addition to participating in The Ohio ARP or the State Teacher Retirement System, you can systematically save pretax dollars by contributing to the Tax Deferred Annuity 403(b) program, a voluntary supplemental retirement savings plan authorized under Section 403(b) of the Internal Revenue Code. Whether you are in the Ohio ARP or the state's Defined Benefit Pension Plans, you can enjoy the benefits of setting aside additional pre-tax dollars (above your employee contribution to the ARP or DB Plans) by contributing to a 403(b) Tax Deferred Annuity (TDA).
Highlights of the 403(b) Tax Deferred Annuity include:
- Choices and control of your investments
- Tax-deferred investing - Under the Internal Revenue Code, with a 403(b) program, you are taxed only when you begin taking distributions
- Portability of your account
Note: This program does not include an employer contribution.
You decide, within certain Internal Revenue Code (IRC) limits, how much of your income you want to invest. Your employer will reduce your paycheck before income tax by that amount and forward it to Voya Retirement Insurance and Annuity Company and invested according to your instructions. Because these contributions are made on a pre-tax basis, you won't be taxed until you begin taking distributions.
Employee Deferrals (including earnings) may generally be distributed only upon your:
- Attainment of age 59½
- Severance from employment
- Disability, or
Note: Hardship withdrawals are limited to Employee Deferrals made after 12/31/88.
No IRC withdrawal restrictions apply to:
- 88 cash value (Employee Deferrals, including earnings, as of 12/31/88)
- Employer Contributions (including earnings)
For 403(b)(1) fixed or variable annuities, employee deferrals (including earnings) may generally be distributed only upon your: attainment of age 59½, severance from employment, death, disability, or hardship. Note: Hardship withdrawals are limited to employee deferrals made after 12/31/88. Exceptions to the distribution rules: No Internal Revenue Code withdrawal restrictions apply to ’88 cash value (employee deferrals (including earnings) as of 12/31/88) and employer contributions (including earnings). However, employer contributions made to an annuity contract issued after December 31, 2008 may not be paid or made available before a distributable event occurs.
Such amounts may be distributed to a participant or if applicable, the beneficiary: upon the participant's severance from employment or upon the occurrence of an event, such as after a fixed number of years, the attainment of a stated age, or disability. For 403(b)(7) custodial accounts, Employee deferrals and employer contributions (including earnings) may only be distributed upon your: attainment of age 59½, severance from employment, death, disability, or hardship. Note: hardship withdrawals are limited to: employee deferrals and ’88 cash value (earnings on employee deferrals and employer contributions (including earnings) as of 12/31/88).
- One Loan is allowed every 12 months.
- For non-residential loans, the required minimum individual account value is $2,000. The minimum loan amount is $1,000.
- For residential loans, the required minimum individual account value is $5,000. The minimum loan amount is $2,500.
- Amounts to satisfy the loan will not be taken from the Guaranteed Accumulation Account (GAA) or Voya U.S. GET Core Portfolio (GET). However, GAA or GET funds may be transferred to other 403(b) investment options to qualify for a loan.
Please note: loans will reduce account balances, may impact your withdrawal value and limit participation in future growth potential. Other restrictions may apply.
There are several distribution options to choose from including:
- Lump sum
- Systematic distribution options
- Variety of fixed and/or variable lifetime-based or period certain payout options
Distributions will be taxed as ordinary income in the year the money is received, and will be subject to a 10% federal tax penalty if received prior to age 59½. Keep in mind, the IRS requires that you begin receiving Required Minimum Distributions (RMD) at the later of when you attain age 70 ½ or retire.
Your benefits will be distributed according to the payment method in effect at your death (consistent with the provisions of the plan, contract, and applicable Required Minimum Distribution) if you die while receiving benefits.
If you die before a payout starts, your beneficiary may elect to receive the value of your account or select one of several settlement options.
Mutual funds under a trust or custodial account agreement are intended to be long-term investments designed for retirement purposes. If withdrawals are taken prior to age 59½, an IRC 10% premature distribution penalty tax will apply, unless an IRS exception applies. Account values fluctuate with market conditions, and when surrendered, the principal may be worth more or less than the original amount invested. Money taken from the plan will be taxed as ordinary income in the year the money is distributed.
Neither Voya Financial® nor its affiliated companies or financial professionals provide tax or legal advice. Please consult a tax adviser or attorney before making a tax-related investment/insurance decision.
Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) Voya Retirement Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Securities are distributed by Voya Financial Partners LLC (member SIPC). All companies are members of the Voya ® family of companies. Securities may also be distributed through other broker-dealers with which Voya has selling agreements. Insurance obligations are the responsibility of each individual company. Products and services may not be available in all states.