Tax Deferred Annuities (TDA)
How does a TDA work?
You decide how much of your income you want to invest (up to the maximum exclusion allowed). The amount is deducted from your salary and no federal income taxes are withheld from the money. Also, earnings on the investment are not taxed until you receive them.
How much can I contribute?
An IRS formula determines how much you can defer in any year and can give credit beyond the minimums for past years when you did not defer income.
May I change the amount I contribute?
Yes, you may increase or decrease your contribution amount once each calendar year. You may stop contributions at any time, but federal regulations do not let you resume payments until the next calendar year.
What happens to my contributions?
Lone Star College System will forward your contribution to the company in which you have selected to invest. You will receive a confirmation statement along with periodic statements to let you see how your investment is doing.
May I withdraw my money from the plan?
Yes, you may withdraw money from the plan. But amounts withdrawn before you reach the age 59 1/2 are subject to a penalty and taxes, except in certain cases, such as death or total disability.
May I take out a loan from TDA?
Under current tax law you may borrow funds from your account and continue to defer taxation.
What companies are available?
Lone Star College System Human Resources and your college Business Office has a listing of approved carriers. You may invest in companies who are licensed to do business in the State of Texas.