tax-deferred annuity

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Tax-Deferred Annuity

A retirement plan in which an employee makes tax-deferred contributions from his/her pre-tax income. The employee is not taxed on the contribution until he/she begins to make withdrawals after retirement. Strictly speaking, a 401(k) is a tax-deferred annuity, but the term especially applies to a 403(b) plan, which is directed at teachers and employees of tax-exempt organizations, such as charities or churches.

tax-deferred annuity

References in periodicals archive ?
When must distributions from a tax sheltered annuity begin?
What minimum distributions must be made from a tax sheltered annuity during the life of the participant under Section 401(a)(9)?
How are the minimum distribution requirements met after the death of a tax sheltered annuity participant?
What are the various methods of funding a tax sheltered annuity plan?
A rollover IRA may also be indicated where an individual has received a distribution from a qualified plan, tax sheltered annuity, or an eligible Section 457 governmental plan and seeks to avoid current taxation on all or a part of the distribution.
Answer--An individual is considered an "active participant" for a taxable year if the individual is covered by (1) a qualified pension, profit-sharing or stock bonus plan, (2) a qualified annuity plan, (3) a tax sheltered annuity plan, (4) a simplified employee pension plan, (5) a government sponsored plan, or (6) an employee only contributory plan exempt from tax under IRC Section 501(c)(18).
An eligible retirement plan with respect to a nonRoth IRA (individual retirement account or individual retirement annuity) means an IRA, a qualified plan, a Section 403(a) annuity, an eligible Section 457 governmental plan (provided it agrees to separately account for funds received from any eligible retirement plan except another eligible Section 457 governmental plan), and a Section 403(b) tax sheltered annuity.
An eligible retirement plan with respect to a Section 403(b) tax sheltered annuity includes a nonRoth IRA, a qualified plan, a Section 403(a) annuity, an eligible Section 457 governmental plan (provided it agrees to separately account for funds received from any eligible retirement plan except another eligible Section 457 governmental plan), and another Section 403(b) annuity.
A qualified plan, a Section 403(b) tax sheltered annuity, and an eligible Section 457 governmental plan must provide a participant receiving an eligible rollover distribution the option to have the distribution transferred in the form of a direct rollover to another eligible retirement plan.
4) Although teachers who are under a state teachers retirement system may also participate in a tax sheltered annuity plan, the employees of the retirement system itself are not eligible.
IRC Section 403(b) provides that the tax sheltered annuity rules apply if "an annuity contract" is purchased for the employee.
A single group annuity contract that pools the assets of an employer's tax sheltered annuity plan and defined contribution plan may also be used where the assets of each plan are separately accounted for at the plan level and at the participant level through the use of sub-accounts.