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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I recently retired from public schools. I was informed My

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I recently retired from public schools. I was informed My accountant that I would have to transfer monies that I had in a TSA(tax shelter annuity) , which was with my employer to an IRA. Because I would not be part of the group plan. I received a quarterly statement from my annuity company(metlife) indicating that the account was still qualfiied and an increase of &2000.00. My question is should I leave the TSA as-under public schools annuity plan or change to an IRA. If I just closed the account, how kind of taxes can I expect to paid out!

Lev :

Hi and welcome to Just Answer!
First of all - you MAY but you do not have to transfer funds out of your TSA account.

Lev :

You may start receiving retirement income from your TSA account - which is a 403(b) plan - and the amount you will actually distribute - will be added to your taxable income.
If decide to close your TSA account - and roll funds directly to the traditional IRA account - that will not be a taxable transaction unless you start distribution out of that IRA account.
If you want - you may open an IRA with your bank or any financial organization.
Please be aware that transfers from a 403(b) plan to a traditional IRA are permitted only when you turn 59 1/2 or if you have left your job or if you become disabled.
Because your funds inside TSA are invested and there is some income - you may want to compare with expected income in the IRA or your choice - and if your expected earnings in IRA are larger - it would be more beneficial to transfer funds.
If you simply take a distribution from your TSA account - the full amount will be added to your taxable income. If that is a large amount - you might be pushed into higher tax bracket. So to avoid larger tax liability - you might want to plan accordingly and spread the distribution over several years.
Your tax liability is based on your total income. You may review tax rate schedule on the last page in this publication -‎
Let me know if you need help to estimate your expected tax liability.

Lev :

Please be sure to ask if any clarification needed.

Lev and 2 other Tax Specialists are ready to help you

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