Pre-tax or Roth after-tax savings option
Decide whether you want to save on a pre-tax basis, Roth after-tax basis, or both.
Review the Roth decision tree to help determine which savings option is most appropriate for you.
Use the Paycheck Impact Calculator to see how saving pre-tax or Roth after-tax dollars will affect your paycheck.
THE TAX ADVANTAGES
|Pre-tax contributions |
Defer income taxes until you take a withdrawal from your account.
|Roth after-tax contributions |
Pay income taxes at the time you make a contribution;
withdrawals and any earnings are tax-free (conditions apply - see below)
|Contributions are tax-deferred – your current taxable income is reduced by the amount you contribute.||Pay federal and state income taxes on your contributions.|
|All withdrawals are taxed as ordinary income and subject to federal and state income taxes.||A withdrawal of your contributions are always tax-free. Earnings are also tax-free as long as the withdrawal is made after 5 consecutive tax years since the first contribution was made and the withdrawal is made after age 59½, or due to death, or disability.|
|May be appropriate if you: ||May be appropriate if you: |
For more information…
- Roth 457 brochure Learn about differences in pre-tax vs Roth after-tax investing.
- Pre-tax vs Roth after-tax calculator Understand which contribution option is appropriate for you.
- Paycheck calculator Discover how pre-tax or Roth after-tax contributions will affect your paycheck as well as your retirement savings.