Tax-Sheltered Annuities

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Murray State University
POLICY NUMBER: V H
SUBJECT: TAX-SHELTERED 403(b) ACCOUNTS
APPLIES TO: FACULTY AND STAFF
EFFECTIVE DATE: JUNE 1, 2026
REVISED FROM: JULY 1, 1993

TAX-SHELTERED 403(b) ACCOUNTS

Internal Revenue Code, Section 403 (b), permits employees of the University to purchase tax-sheltered accounts for the purpose of deferring federal and state income taxes until a later date.

1. Intent of 403 (b) Plans

   1. Under such a plan, a portion of an employee's annual salary is not taxed at the time the salary is earned. It is withheld from an employee's salary and paid to a university approved 403(b) vendors to be held until the employee wishes to withdraw the funds, at which time taxes would be paid.

   2. The intent of such plans is to create a retirement fund and defer taxes until retirement when an employee would normally be in a lower tax bracket. Appropriate taxes must be paid at the time the funds are withdrawn.

2. Approved Companies
   Retirement vendors approved by the Retirement Oversight Committee, as presented by Murray State University's retirement consultant, shall be permitted to offer tax-sheltered 403(b) Account programs to Murray State University under the following conditions:

   1. Human Resources will maintain a list of approved vendors which will be made available vendors which will be made available for review by Murray State University employees.  

   2. Murray State University will make payroll deductions from the salaries of employees signing tax-sheltered 403(b) account contracts.

State policy prohibits solicitation in state offices during office hours. This policy also applies to Murray State University.