The IRS has set new limits for tax-deferred annuity plans, which can help employees save for retirement.
A tax-deferred annuity is a plan that enables employees to put aside money into an investment account that can build income for retirement. As a public nonprofit organization, the University can offer its employees the opportunity to participate in investing in a tax-deferred annuity, which is a benefit covered in Sections 403b and 457 of the Internal Revenue Code.
Beginning Jan. 1, contribution limits for 2019 are: $19,000 for those younger than the age of 50, and $25,000 for those 50 and older. This is an increase of $500 from 2018. Employees also may be eligible to make “catch up” contributions to their annuity. Please contact your vendor for specific details.
UT employees who would like to increase or change their contribution amounts for 403b plans need to complete the Salary Reduction Agreement form stating the new per-pay contribution amount. To start contributions the first pay in January, the form needs to be received by UT’s Benefits Department in Human Resources before Monday, Dec. 10. Employees can enroll or make changes to these plans any time during the year.
For Ohio Deferred Compensation 457 plans, employees need to contact Ohio Deferred Compensation to change or start their contribution. More information is available online at the Ohio Deferred Compensation website.
“Also, 12-month employees are reminded that all contributions are for 26 deductions — or 19 deductions for nine-month employees — for 2019,” said Kate Johnson, manager of benefits planning and administration.
When you participate in the tax-deferred annuity program, you agree to have the University take out an amount of money you want to redirect into the annuity, mutual fund or Ohio Deferred Compensation that you select. Contributions are taken from your salary before taxes are deducted, which results in an immediate tax break.
“Investing through a tax-deferred annuity reduces your pay only for income tax purposes,” Johnson said. “It does not affect how pay raises are calculated or any other benefits that are based on pay.”
To establish a tax-deferred annuity, contact a 403b vendor or Ohio Deferred Compensation to create an account. A list of vendors and their contact information is available on the Human Resources website.
For more information, contact a benefits representative at firstname.lastname@example.org or 419.530.4747.