Tax Facts

4062 / How are dividends under a tax sheltered annuity treated for income tax purposes?

Updated: October 23, 2026 at 06:57 PM
Dividends are treated as earnings on 403(b) investments. The IRS treats interest on accumulated dividends as part of a retirement fund and interest is not taxed until the participant begins to receive distributions from the fund.1




1. General Information Letter, Jan. 20, 1978.


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