Tax Considerations
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Taxes Deferred on Account Accumulations
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| Because the funds contributed to the State University System Optional Retirement Program (SUSORP or ORP) are for your retirement benefits, you pay no current Federal income or Social Security taxes on those contributions or their investment earnings 1. (When you decide to retire and receive your retirement funds, those benefits will be subject to Federal income taxes as described below.)
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| 1 Special tax laws allow public employees to exclude certain contributions from current federal income taxes (not including Social Security taxes). You may elect to contribute a percentage of your earnings, subject to Internal Revenue Code limits under Secs. 403(b)2, 415(c), and 402(g).
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Taxes Owed upon Withdrawal
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| If you withdraw any or all of your voluntary tax-sheltered contributions from the SUSORP, and do not directly deposit those funds into another tax-deferred vehicle, the amount withdrawn will be subject to income taxes. Certain restrictions and tax penalties apply to withdrawals from tax-sheltered annuities before age 59½. Because of this and the law's possible impact on your financial planning objectives, you are encouraged to seek information and advice from a qualified advisor or tax planner before withdrawing any of your ORP funds.
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Special Considerations
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| If you participate in more than one tax-sheltered plan (such as a 457 deferred compensation plan), then you are responsible for ensuring that your total tax-deferred income - in other words, all income you elect to shelter from taxation by directing it into voluntary contributions to a tax-sheltered plan - does not exceed the maximum as specified by Internal Revenue Code and Regulations. Please contact your provider(s) or a tax planner for a contribution limit calculation.
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| (See Contributions or Voluntary Contributions for more on this subject.)
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| E-mail your SUSORP comments or questions to us. Please include your name, mailing address, e-mail address, the last four digits of your social security number (SSN), and your phone number if you require an answer from us.
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