Investments types 2 Government Grants

403(b) Tax Sheltered Annuities (TSAs). Similar to a 401(k) plan, TSAs are retirement plans for nonprofit organizations such as schools, hospitals or social service agencies. These plans allow you to set aside a portion of your pay on a pretax basis and the money invested in a TSA grows free from taxation until such time as you withdraw the money. Withdrawing money from your 403(b) plan before age 591/2 is generally prohibited. But there are exceptions. Certain 403(b) plans permit hardship exceptions such as the purchase of a primary residence or college tuition. If you qualify for a hardship withdrawal, you will still pay a 10% early withdrawal penalty plus regular taxes. The maximum amount you can contribute to a TSA is determined by how much you make, how long you’ve worked for your current employer and the amount you contributed in prior years.

Individual Retirement Arrangements (IRAs). IRAs were established to encourage people to save for retirement. Subject to certain limitations, an individual generally may be able to contribute the lesser of the amounts shown below or 100% of your compensation to an IRA, and the earnings grow tax deferred until you begin withdrawals. Additionally if you are age 50 and over, you are permitted to make catch-up contributions to your IRA for years that you did not fully invest. You may contribute an extra $500 per year through 2005 and an extra $1,000 per year in 2006 and beyond. Your annual contribution may also be fully or partially deductible, depending on your income level and whether you are covered by another retirement plan. As with 401(k) and 403(b) plans, you may be subject to a 10% IRS penalty for premature withdrawals (generally before the age of 591/2), in addition to the income tax. You may have a choice of investment options for your IRA, including stocks, bonds, mutual funds or CDs. Keep in mind that your money must be in an IRA-approved account and that it must be designated as an IRA.

YEAR	CONTRUBUTION LIST
2001	$2,000
2002	$3,000
2003	$3,000
2004	$3,000
2005	$4,000
2006	$4,000
2007	$4,000
2008	$5,000

Thereafter contributions may be indexed periodically for inflation in $500 increments.