Did you know: Roth 403(b)
In addition to pre-tax 403(b) retirement plan contributions employees can also contribute to 403(b) Roth plan.
Maybe you’re wondering “What’s the catch?” Unlike traditional pre-tax contributions, Roth 403(b) contributions are made with after-tax dollars. So you’d pay more in taxes today with the Roth. But that could be a price worth paying if it means tax-free retirement money.
What is a Roth account?
It is a retirement account to which an employee may choose to contribute. The amount contributed to a 403(b) Roth account is included in gross income in the year of the contribution, but eligible distributions from the account (including earnings) are generally tax-free.
Who can contribute to 403(b) Roth?
Any employee in pay status. Can I make both pre-tax and Roth contributions to my 403(b) in the same year? Yes, you can contribute to both a designated Roth account and a traditional, pre-tax account in the same year in any proportion you choose.
Is there a limit on how much I may contribute to my 403(b) Roth account?
Yes, the combined amount contributed to all designated Roth accounts and traditional, pre-tax accounts in any one year for any individual is limited (under IRC Section 402(g)). The limit is $18,000 in 2015, plus an additional $6,000 in if you are age 50 or older at the end of the year.
Can I make age-50 catch-up contributions to my 403(b) Roth account?
Yes, provided you are age 50 or older.
How can I start my contributions?
You need to log into your Fidelity account.
From the Quick Links menu, located on the 403(b) plan option.
- Select Contribution Amount.
You will be taken to the next screen where you will get an option to manage your contributions.
- Click on Contribution Amount.
The next screen gives you an option to elect a new amount. You can choose to contribute Pre-tax or Roth (after-tax). Please note that contribution is per pay period and it may take effect on the month following the election.