Many employers provide tax-sheltered annuity (TSA) plans and retirement programs that charities, churches and schools can offer to workers. Not every organization is eligible for these retirement programs, but consultants can explain employee benefits they can receive with this option.
Companies often use a standard retirement plan, known as a 401(k), to help workers save for their future. A 401(k) deducts a portion of a worker's salary toward an employer-sponsored retirement plan. Contributions are not taxed until they are deducted by federal or state governments.
A TSA plan or 403(b) operates in a similar fashion, and it is available to employees of a charity, church or school. Enrolling in a 403(b) may require a worker to complete Form 5500, a U.S. Department of Labor research and compliance tool used to monitor employee benefit plans.
Finding the best way to provide information to the government can be challenging for human resource departments, and employee benefit services can help. These consultants can offer instruction about Form 5500, and can explain the pros and cons of TSA plans.
A 403(b) gives employees flexibility in how much they can contribute. For example, a 50-year-old employee may choose to contribute a greater amount of his annual salary to a 403(b) plan than a 25-year-old worker. The 50-year-old staff member is closer to retiring, and may try to save as much money as possible before the age of 65. Meanwhile, the 25-year-old worker may need to commit more of his yearly compensation to immediate needs.
In a TSA plan, employees under the age of 50 can contribute up to $17,000 in 2012. In addition, catch-up contributions are available to workers over the age of 50. These employees can offer as much as $5,500 in 2012, a total based on IRS regulations.
The plan can help people save for their futures, but the program can limit workers' investment options. A 401(k) provides more ways to invest money, and employers should review their options before deciding which type of retirement plan best best fits their employees' needs.
Employee benefit consultants can support organizations and their employees by providing information about TSA plans. These firms offer research that can assist employers during the evaluation process. Assessing the value of a 403(b) can be difficult, and consultants can answer any questions supervisors may have regarding TSA plans.
