The Voluntary Tax Sheltered Annuity (VoTSA) Program provides you with a way to save tax free money for retirement. When you start a VoTSA, money is "tax deferred" (deducted before taxes) and sent to one of the approved VoTSA companies that you have selected. You are not taxed on this money until you receive payments from the VoTSA company which is normally after you retire. At that time, your income probably will be lower and may be taxed at lower rates.
The Board of Regents has approved a Plan Document for the Voluntary Tax Sheltered Annuity Program. The Plan Document codifies the rules and policies relevant to the Voluntary Tax Sheltered Annuity Plan. The Plan Document collects these rules so that employees and administrators can look to one primary source to determine the rights and obligations for Plan participants, the state universities and the Kansas Board of Regents. In addition to codifying the KBOR policies, the Plan Document also addresses current provisions of the Internal Revenue Code and Kansas statutes as they apply to the Voluntary Tax Sheltered Annuity Plan.
To start a VoTSA:
You can start a salary reduction for the VoTSA program at any time. You can also also change your VoTSA amount or percentage or stop your salary reduction at any time. A Retirement Plan Investment Agreement must be completed and returned to HRS to start, change or stop your VoTSA contribution.
You can contribute to only one VoTSA company at a time, and you can change your VoTSA company one time each calendar year.
The maximum amount that you may contribute to a VoTSA before taxes (tax deferred) in a calendar year is limited by Sections 403(b), 415, and 402(g) of the Internal Revenue Code (IRC).
The Economic Growth and Tax Relief Reconciliation Act of 2001 will eliminate the maximum exclusion allowance calculations applicable to 403(b) plans and will become effective January 1,2002. All of the provisions in the Act will expire on December 31, 2010, however, and the tax laws will revert to their 2001 configuration, barring further legislation.
The 402(g) limit on employee elective deferrals to 403(b) plans will increase to $11,000 in 2002, $12,000 in 2003, $13,000 in 2004, $14,000 in 2005, and $15,000 in 2006. Beginning in 2007, the 402(g) limit will be indexed in $500 increments. The maximum elective deferrals for 2012 will be $17,000.
Employees age 50 and older may make elective deferrals to 403(b) plans above and beyond the statutory limit for 403(b) plans. Employees over age 50 will be able to contribute an additional $1,000 in 2002, $2,000 in 2003, $3,000 in 2004, $4,000 in 2005, and $5,000 in 2006. Beginning in 2007, catch-up contributions will be indexed in $500 increments. The maximum catch-up contributions for 2012 will be $5,500.
Employees with 15 or more years of service may be able to defer up to $3,000 more to their 403(b) plans.
Although there are no restrictions on the number of times you may use the 15-Year Rule, be certain to keep track of contributions made under this Rule, including those made through other carriers or employers and through 401(k) plans. The 15 year limit is a lifetime limit. You cannot contribute more than $15,000 under this rule.
Companies Approval for VTSA
To be approved for the VoTSA program, a company must submit verification to the Kansas Board of Regents office that it does meet the requirements of section 403(b) of the Internal Revenue Code of 1986, as amended, and there are five employees contractually committed to participate in the company's voluntary tax-sheltered plan. The Kansas Board of Regents office is located at 1000 SW Jackson St., Suite 520, Topeka, KS 66612-1368.
Before PSU can send contributions on behalf of an employee to a VoTSA company, the company must provide PSU with a list of the names of its agents who will solicit business on the PSU campus. No more than four (4) agents shall be listed at any one time, and solicitation by agents other than those listed shall not be permitted. The list shall be accompanied by a statement, signed by a company officer, that the agents named are trained in the sale and service of tax-sheltered annuities. If the company does not engage in on-campus solicitation, it should state such in the letter. Letters with necessary information are sent to:
John Patterson, Vice President
Administration and Campus Life
Pittsburg State University
1701 S. Broadway
Pittsburg, Kansas 66762