What is Tax sheltered annuities?

Tax-sheltered annuities (TSAs) are investment vehicles designed primarily for employees of public schools and certain non-profit organizations, allowing them to save for retirement. Contributions to TSAs are made on a pre-tax basis, which means they reduce taxable income in the year they are contributed, and taxes on the investment gains are deferred until withdrawal. This tax deferral can enhance the growth of the investment over time. Upon retirement or withdrawal, the funds are taxed as ordinary income.