Tax Sheltered Annuity
A TSA is a plan that allows your contributions and the interest they earn to accumulate on a tax deferred basis until you withdraw them at retirement Employees of public school systems, churches and organizations that qualify under section 501(c)(3) of the Internal Revenue Code may participate in a TSA. Generally, your contribution can be larger than the maximum IRA contribution, allowing you to accumulate more for your retirement than you could with an IRA offering the same interest rate.
Tax sheltered annuities are available to the clergy and other tax exempt organizations. The church must make the contribution as a salary reduction or as an increase in income. This annuity is tax deferred and exempt from social security. You can exclude up to 20 percent of your compensation, multiplied by the number of years, less amounts contributed in prior years. All contributions must be made by December 31st of that taxable year.