Iowa State University

Inside Iowa State
Feb. 23, 1996

Retirement Advising Office:

Taxes too high? Pay yourself instead

The dollars you put aside for your retirement benefits are not taxed this year and won't be taxed until you receive them during retirement. Setting aside dollars is a significant way to delay taxes and grow your retirement nest egg.

Those who have a TIAA-CREF contract are doing this every month when the university deducts 5 percent from their checks and then double-matches it. This is one of the easiest and most efficient ways to build assets for retirement through tax-deferred annuities. Easy because you use a salary reduction agreement to set aside contributions even before you get your paycheck. And efficient because contributions are pre-tax investments -- not counted as part of your taxable income until you later take out the money as cash or retirement income.

As a contract holder with TIAA-CREF, you can add even more to what you are saving and pay less taxes next year with Supplemental Retirement Annuities (SRAs). These, too, are tax-deferred annuities offered by TIAA-CREF. You can allocate your contributions to TIAA or any of the CREF accounts and rearrange the distribution of those allocations whenever you like. However, you can change the amount you contribute to your SRA just once a year.

TIAA-CREF SRAs offer a number of special features. There are no sales or surrender charges, and administrative expenses are among the lowest of all mutual funds and insurance companies. There is a wide range of pay-out options and flexibility.

Another plus is that SRA contributions have not been matched by the university, so they are yours. The total accumulation can be cashed out at retirement or rolled out to an IRA. Loans against your accumulation balance are available.

There are more than 40 alternatives to a TIAA-CREF SRA. They are called tax-sheltered annuities (TSAs). To sign up for an SRA, or for a list of the other 40 TSAs, contact the Benefits Office, 4-7680.

For more information about TIAA-CREF SRAs, or to discuss retirement benefits, make an appointment with the Retirement Advising Office, 4-3830.

Source: Ann Molison

Inside Iowa State
University Relations

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Revised 2/22/96