403(b) accounts are a unique way to help save for retirement
You may already be familiar with Traditional 403(b) plans, but do you know about the benefits of a Roth 403(b) account?
Roth 403(b) contributions are made after taxes are taken out of your paycheck. The earnings also grow tax-deferred, and qualified distributions are not taxed.
Traditional 403(b) or Roth 403(b)?
2022 Comparison Traditional 403(b) vs. Roth 403(b): Understand Your Retirement Plan Choices
The requirements to receive a distribution from a Roth 403(b) are the same as from a Traditional 403(b). The tax benefits of a 403(b) plan depend on your current and future tax brackets. If you expect to be in a lower tax bracket during retirement, the Traditional 403(b) is likely to be the better choice. If you expect to be in a higher tax bracket during retirement, then the Roth 403(b) is probably for you. If you expect your tax bracket will be the same, both 403(b) plans offer you the same benefit.
What does a Roth 403(b) offer?
• Account portability
• Basic contribution limit of $20,500
• Age 50 catch-up contribution limit of $6,500
• Tax advantages and tax-free distributions
So, why choose a Roth 403(b)?
Tax-free distributions and account portability make Roth 403(b)s accounts appealing to some investors. You can also have a traditional and Roth 403(b) account.
Although Roth 403(b) contributions won’t reduce your current income tax liability, they will provide a tax-free income source at retirement (as long as they are withdrawn after age 59½ and the account has been in existence for at least five years).
Still not sure if a Roth 403(b) is right for you? Our financial advisors are happy to explore this opportunity with you. CONTACT US today!