Who is eligible to contribute to a Tax Sheltered Annuity (TSA)?

Tax Sheltered Annuities (TSAs), often used as a retirement savings vehicle, specifically target employees of certain sectors. The primary groups eligible to contribute to a TSA include public education employees (like public school teachers) and clergy members. This is because TSAs were created under Internal Revenue Code Section 403(b), which is designed for tax-exempt organizations, particularly those in the education sector and certain religious institutions.

The option referring to public school teachers and clergy members captures this eligibility accurately, making it the correct answer. In contrast, while federal employees may have similar retirement options, they do not specifically fall under the TSA category. Private sector employees typically utilize different retirement plans, such as 401(k)s, rather than TSAs. Lastly, the mention of "all employees eligible for 401(k)s" does not apply, as TSAs are not universally available to all workforce categories. This specialization of TSAs for public education and clergy reflects their unique contribution and savings framework, distinguishing them from other retirement plans available in the broader employment market.