The Value Benefits of the Tax Sheltered Annuity TSA

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TheValue Benefitsof theTax ShelteredAnnuity(T
SA)
The Value Benefits of the Tax Sheltered Annuity
(TSA) seminar is presented by Kansas City Life
Insurance Company, 3520 Broadway, Kansas City, MO
64111, [phone]
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The Value Benefits of the Tax Sheltered Annuity
(TSA)

• Sponsored by
• Daniel Kempton, MBA
• Presented by
• Kansas City Life Insurance Company

The Value Benefits of the Tax Sheltered Annuity
(TSA) seminar is presented by Kansas City Life
Insurance Company, 3520 Broadway, Kansas City, MO
64111, [phone]
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Todays Agenda

• What is a TSA?
• Advantages
• Benefits Features

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What is a TSA?

• Retirement Program Created Under IRC 403(b)
• Set Aside a Portion of Your Income Before Federal
  and State Taxes Are Withheld
• Salary Deferrals Deposited Into a TSA Funding
  Contract

Certain states (e.g. Pennsylvania) require
state taxes to be withheld.
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What is a TSA?

• Public and Private Education Institutions, and
• IRC 501(c) (3) Organizations Exempt From
  Taxation
• Churches, Non-profit Hospitals, Zoos, Museums,
  Charitable Organizations

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What is a TSA?

• Your Employer
• Meets the Requirements and
• Offers a TSA Program for Your Benefit

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Retirement Living
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Sources Of Retirement Income

• Social Security
• Personal Savings
• Employer SponsoredRetirement Plans

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Social Security
Benefit as Final Pay
Based on 2001 Social Security Administration
Benefit Calculator
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Personal Savings
Challenges
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Personal Savings
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Employer Sponsored Retirement Plans
Tax Sheltered Annuities
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TSA Advantages

• Tax Savings
• Immediate Tax Deferral of Contributions
• No Federal and State Income Taxes
• Earnings Accumulate Tax Deferred
• Money Accumulates Faster

Certain states (e.g. Pennsylvania) require
state taxes to be withheld.
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TSA Advantages
Growth if tax-deferred pre-taxes 125,703
Assumptions 1,500 annually, before
taxes 1,050 annually, after taxes 30 combined
federal state income tax bracket 6 net annual
compounded rate of return
Growth if tax-deferred after taxes 87,992
Growth if taxable 81,727
Hypothetical example and rate of return for
illustrative purposes only and does not represent
any particular investment. Return is net of
fees and expenses.
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TSA Advantages
Employers Matching Contribution

• ___ of First ___ of Salary

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TSA Advantages

• Save Additional Tax Dollars by
• Lowering Your Current Tax Bracket
• Or
• Avoiding Moving into a Higher Tax Bracket

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TSA Advantages

• Effects on Your Take Home Pay

Without
Contributing Contributing
to TSA
to TSA .
Monthly Pay 2,500 2,500 Deferral (5)
0 125 Taxable Income 2,500 2,375
Federal and State Tax 750 713 Take
Home Pay 1,750 1,662 Difference
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Amount Saved 0 125
Assumes combined federal and state tax of 30.
This is a hypothetical example for illustrative
purposes only.
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TSA Advantages
Big Money Later
Small Cut Now

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Cost of Waiting
Accumulation in 30 Years . . . . 125,703 Accumula
tion in 29 Years . . . . 117,087 Cost of Waiting
One Year . . . . 8,616 Cost Per Month . . . . .
. . . . . . . 718 Cost Per Day . . . . . . . .
. . . . . . . 23
Assumes contribution of 125 per month _at_ 6.
This is a hypothetical example for illustrative
purposes only.
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TSA Advantages
Advantage of Starting Early
Assumes 1500 contributed annually at 6 annual
rate of return. This is a hypothetical example
for illustrative purposes only.
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TSA Advantages
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Benefits Features

• Maximum Salary Deferral Amount
• Generally, 20 of compensation to a maximum of
  10,000
• Catch up provisions

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Benefits Features

• All the money is yours
• Convenience of payroll deduction
• Employer submits to financial institution
• Financial institution allocates according to your
  election
• Flexibility in contribution amount
• Stop at anytime
• Change as often as permitted by your employer

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Benefits Features

• You Can Borrow the Greater of
• 10,000
• or
• 50 of account balance not to exceed 50,000
• Must make payments at least quarterly
• Maximum loan period of 5 years

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Distributions

• When can I withdraw from my TSA Account?
• At age 59 ½ or older,
• At separation of service with your employer,
• If you become disabled,
• Upon death,
• Upon financial hardship, or
• Account balances accrued prior to 1/1/89 may be
  available for withdrawal at your discretion.

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Distributions

• Lump Sum
• subject to 20 federal withholding
• All lump sum distributions prior to age59 ½
  incur a 10 IRS penalty EXCEPT
• disability
• death
• substantially equal payments over the life
  expectancy(s) of you or you and your designated
  beneficiary
• separation of service and at least age 55 in the
  calendar year of separation

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Kansas City Life

• Providing TSA Services for Over 30 Years
• Financial Strength
• Ratings

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TSA in Review

• Tax Sheltered Annuity Program
• offered by your employer and available for your
  benefit
• Advantages
• tax deferral of contributions and earnings
• money accumulates faster
• start as early as possible
• Benefits and Features
• payroll deductions
• flexibility to change as necessary
• generous salary deferral maximum
• loans and hardship withdrawals
• wide variety of investment options
• multiple withdrawal options

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Thank You!