Question 1

What is a 401(b) Plan / Tax-Sheltered Annuity Arrangement (TSA)?

Accepted Answer

A Tax-Sheltered Annuity Arrangement is a type of plan for use by certain tax-exempt (non-profit) organizations to provide retirement benefits for their employees.

Question 2

How does a 403(b) / TSA Plan provide retirement benefits?

Accepted Answer

by purchasing annuities or contributing to custodial accounts invested in mutual funds.

Question 3

Can 403(b) plans invest in limited partnerships?

Accepted Answer

No. 403(b) plans cannot invest in limited partnerships.

Question 4

What are the 3 types of employers that qualify to offer a 403(b) plan?

Accepted Answer

a). Public Educational Systems such as teachers and administrators. b). Certain 501c3 organizations, such as religious, education, and charitable organizations, etc. c). Certain employers of ministers.

Question 5

Who is the 403(b) plan designed for?

Accepted Answer

Employees of certain non-profit organizations only. This includes public schools as well as educational, charitable, and religious organizations (hospitals, foundations, churches, etc.).

Question 6

Annual contributions (“Additions”) to a TSA plan may include:

Accepted Answer

1). Elective salary reduction contributions made by the employee 2). Non-elective contributions made by the employer 3). After-tax contributions made by the employee

Question 7

Contributions to a 403(b) plan may be made annually up to

Accepted Answer

specified limits.

Question 8

Are all types of contributions to 403(b) plans aggregated, not to exceed the annual limit?

Accepted Answer

Yes.

Question 9

What is the annual limit on elective salary reduction/deferral contributions into a 403(b) plan?

Accepted Answer

2017: $18,000 (+$6,000 catch-up) 2018: $18,500 (+$6,000 catch-up) for individual elective deferrals, not “Annual Additions” (annual contributions)

Question 10

When are distributions to a 403(b) plan to begin?

Accepted Answer

at age 59 1/2.

Question 11

Are funds withdrawn before age 59 1/2 from a 403(b) plan subject to a 10% penalty tax?

Accepted Answer

Yes, except for: death disability medical expenses first time home purchases higher education costs medical insurance premiums.

Question 12

What is the mandatory age for distributions to begin on a 403(b) plan?

Accepted Answer

age 70 1/2.

Question 13

Are required minimum distributions (RMDs) on a 403(b) plan required to begin no later than April 1st following the calendar year in which the owner reaches age 70 1/2?

Accepted Answer

Yes.

Question 14

Are late distributions on a 403(b) plan subject to a 50% penalty tax on the insufficient distributions?

Accepted Answer

Yes.

Question 15

What if you continue to be employed by the 403(b) plan sponsor beyond age 70 1/2?

Accepted Answer

then your RMDs can be delayed until retirement.

Question 16

How are distributions from a 403(b) plan taxed to planholders?

Accepted Answer

Distributions to plan holders are taxed as ordinary income with a cost basis of zero.

Question 17

Can distributions from a TSA plan be rolled over into another TSA plan -OR- into other types of retirement plans such as IRAs or qualified plans (401k)?

Accepted Answer

Yes.

Question 18

What is a Non-Qualified Deferred Compensation Plans?

Accepted Answer

A Deferred Compensation Plan is generally a non-qualified contract between an individual and their employer to defer compensation as agreed upon between the two parties.

Ch 11(3) Retirement Plans & College Tuition Plans | Other Retirement Plans Flashcards

Detail 403(b) Plans, Non-Qualified Deferred Compensation Plans, 457(b) Plans, Payroll Deduction Plans, & Money Purchase Plans.

Brainscape's Knowledge GenomeTM

Ch 11(3) Retirement Plans & College Tuition Plans | Other Retirement Plans Flashcards

Detail 403(b) Plans, Non-Qualified Deferred Compensation Plans, 457(b) Plans, Payroll Deduction Plans, & Money Purchase Plans.

Brainscape's Knowledge Genome^TM