Create an Income Stream
Taking initial withdrawals of 4% or considering annuities are often recommended to retirees.
Teachers, school personnel, doctors, nurses, hospital employees, and members of nonprofit organizations may be eligible for tax-sheltered annuities (TSAs).
A TSA, which is authorized under section 403(b) of the Internal Revenue Code, allows specific groups and individuals to purchase annuities that are paid for through payroll deductions on a tax-deferred basis.
TSAs can be either fixed or variable, and enjoy the same tax benefits as other annuities.
Contributing pre-tax dollars to an annuity reduces the amount of taxable income an employee earns each year, and income tax is deferred until a later point in life when, perhaps, the employee falls into a lower tax bracket.
TSA contributions are intended for retirement use, though the money can sometimes be withdrawn earlier in cases of financial hardship, disability, death, or the termination of employment.
When it is withdrawn, the money can be taken out as one lump sum, partially withdrawn, rolled over to an IRA or other TSA account, or annuitized.
Like other annuities, TSAs may be subject to transaction charges and/or maintenance fees, both during the accumulation period and during the payout period.
Be sure you read and understand the fine print before beginning payment to any annuity.
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