Tax Sheltered Annuities


​In addition to your primary retirement benefits through your pension, RSCCD gives you the option to set aside even more money for your retirement. You can make pretax contributions to either a 403(b) plan or a 457(b) plan —and save more for your future with tax advantages.  These types of plans are also referred to as Tax Sheltered Annuities (TSA).

What is a 403(b) or 457(b) and a Roth 403 (b)?

403(b) and 457(b) refers to IRS code sections and they are both tax-deferred (pre-tax) retirement savings plans made available to employees of schools and governmental organizations. Contributions to the plans are invested in mutual funds, bond funds, annuities, or other investment vehicles and grow tax free until withdrawn.

​RSCCD also offers an after-tax 403(b) called the Roth 403(b): The Roth 403(b) plan allows you to save part of your income on an AFTER-TAX basis. Generally, earnings in the Roth 403(b) plan are not taxable upon withdrawal as long as you've held the account for at least 5 years and are over the age of 59 ½. The benefit of the Roth 403(b) is potential tax-free growth. 

What does "tax deferred" mean?

Under a tax-deferred retirement plan, you are not paying taxes on your contribution or investment earnings now, but are delaying any possible tax liability until you retire (or withdraw money from your 403(b) account). Depending on your future tax bracket at time of withdrawals, this delay could result in much less tax liability.


All employees who receive compensation reportable on a W-2 are eligible to participate in the plan.  You cannot be excluded from participation unless one of the below exclusions apply:

  • Employees who are non-resident aliens;
  • Employees who are students performing certain services
  • Employees who normally work fewer than 20 hours per week

​What is the difference between a 403(b) and 457(b) plan?

Withdrawing funds prior to age 59½ incurs a 10% early withdrawal penalty levied by the IRS.No 10% penalty for early withdrawal.
Attainment of age 59½ qualifies as a distributable event that permits you to withdraw funds from your account.Attainment of age 59½ qualifies as a distributable event that permits you to withdraw funds from your account..
Allows for an additional age catch-up contribution amount of $6,500 if one is age 50 or olderAllows for an additional age catch-up contribution amount of $6,500 if one is age 50 or older.
403(b) plans may permit you to exceed the $20,500* annual contribution limit if you have at least 15 years of service with our current employer.No 15 years of service catch-up option.
No catch-up for entering your final 3 years of services of service prior to retirement.457(b) plans may allow you to exceed the $20,500* annual contribution limit if you are entering your final 3 years of employment prior to retirement.

What is the benefit of enrolling in a TSA?

Both plans are designed to let you save for your future with tax advantages. Your contributions come out of your paycheck before taxes, so it costs you less to save for your future. For example, when you contribute $100 in the 403(b) Plan or 457(b) Plan, it really only costs you $75 out of your paycheck (assuming a 25% tax bracket). Why? Because you pay $25 less in income taxes today. And that means more of your money goes to work for you.​

Studies suggest that up to 80% or more of current income may be needed annually to live close to the same lifestyle at retirement. School employees contribute to their pension plans through CalSTRS or CalPERS and a common misconception is that their pension plan will replace 100% of income in retirement. On average, CalSTRS and CalPERS replaces between 50-65% of income. The difference needed to meet your retirement goal can be supplemented by contributing to a 403(b), Roth 403(b), or 457(b) plan. 

How Do I Sign Up?

Schools First Credit Union is our Plan Administrator for all TSA accountsAs the leading Third-Party Administrator of retirement plans for school employees, SchoolsFirst has served the educational community for more than 30 years. They provide retirement plan administration services for 403(b), Roth 403(b), 457(b) and FICA Alternative plans to more than 300 California school districts and eight county offices of education.

If you are interested in enrolling or have questions about the products, please feel free to contact our Retirement Plan Advisor below or check out the website @

Felipe Millan

Retirement Plan Advisor

Phone: 800.462.8328 ext 4116 opt. 1



Another terrific source of information about 403b plans is  

The 403bCompare web site is an information bank of free objective information about 403(b) vendors and the 

products they offer.

This site was created to help employees of California’s local school districts, community college districts or county 

offices of education make better-informed investment decisions by offering information about:

  • 403(b) plans, available investment options, fees involved and product performance information.
  • Registered 403(b) vendors' experience and services for the products.
  • General retirement planning and educational materials.

The California State Teachers’ Retirement System (CalSTRS) created and is responsible for ongoing maintenance 

of this site as required by California Education Code 25100


​​Rancho Santiago CCD 403(b) Summary Plan Description.pdf

457(b) Summary Plan Description.pdf