As a Texas Educator, you have the option to fund a 403(b). In Texas, the 403(b) is also called a TSA which stands for Tax-Sheltered Annuity. There are limits placed on investment options within Annuities. There are three basic types, Variable, Fixed, and Indexed. The investment options are specified in the individual contracts and should be closely evaluated before purchasing.

403(b) Advantages and Disadvantages

  • Payroll Deduction (Automatically Contributed When Paid)

  • Monitored by the State (Increased Protection – Limited Options)

  • Activated by the ISD (Layer of Protection – Limited Options)

  • Administered by a Third Party (Layer of Protection – Response to Requests and Changes May Take Longer)

  • Larger Contribution Limits Than IRAs ($20,500 VS $6,000 / $27,000 VS $7,000)

  • May Have ROTH and Traditional Options (Controlled by the ISD)

  • 403(b) May Have Loan Provisions (Controlled by the ISD)

  • Distributions While Employed Are Limited (Controlled by the TPA and IRS Rules)

Everyone should consider all options when deciding to fund a retirement plan. The most important thing is the commitment to yourself. Make a strategic plan for how you will fund your retirement and stick with it. Also, depending on your AGI, you may not be able to deduct your IRA contributions if your employer has a qualified plan that you are able to contribute to. Any other questions or if you want help making the most of your retirement funding options, we are happy to provide help. Contact Us