Did you know you may be able to contribute pretax and after-tax Roth contributions to your 403(b) account?
Pretax contributions lower your current taxable income, and are taxed as income when you take them out as withdrawals.
After-tax Roth contributions are taxed before the contribution goes into your 403(b) account. As long as certain requirements are met,* Roth funds, including all accumulated earnings, are not taxed when you take them out as a distribution.
So, the question is, do you want to pay the taxes on your deferrals now or when you retire?
One of the key advantages of Roth savings is the potential to lower your tax burden in retirement. As a public school employee, your retirement income may include a pension, Social Security, and individual retirement savings. All are typically taxed as ordinary income. By contributing to a Roth 403(b), you can create a source of tax-free income in retirement.
For more details explaining Roth 403(b) deferrals as well as information on how after-tax and before-tax savings may fit into your retirement savings strategy, see our To Roth or Not to Roth in your 403(b) online brochure.