Help with New Retirement Plan Option
Posted: Wed Jun 13, 2018 5:38 am
Hi,
I currently participate in employer-sponsored 403(b) + 457(b) plans and maximize contributions and associated match; my income precludes contributions directly into a personal Roth IRA. My retirement plan now offers a new option:
“We are happy to announce an exciting new upgrade to our 403(b)/401(k) retirement plans. We're replacing the existing after-tax contribution option with a Roth option. Roth contributions are combined with pre-tax contributions, and in total you can contribute up to $18,500 if under age 50. You may contribute up to 75% of your eligible compensation up to the IRS annual limit (currently $18,500, though other plan limits may apply). Match contributions will be calculated on both pretax and Roth contributions up to a maximum of 2% of your eligible pay, and are deposited to your account on a tax-deferred basis.
Consider a Roth account if:
• Your pay exceeds Roth IRA limits and you cannot open Roth IRA elsewhere.
• You think your income will be subject to a higher effective tax rate when you retire than it is today."
Does this mean that I can now fund a Roth 403b through my employer with $18,500/year with no income limit (at the cost of forgoing regular 403(b) pre-tax contributions)? How should this effect my retirement savings/planning?
Thank you, in advance, for your input.
I currently participate in employer-sponsored 403(b) + 457(b) plans and maximize contributions and associated match; my income precludes contributions directly into a personal Roth IRA. My retirement plan now offers a new option:
“We are happy to announce an exciting new upgrade to our 403(b)/401(k) retirement plans. We're replacing the existing after-tax contribution option with a Roth option. Roth contributions are combined with pre-tax contributions, and in total you can contribute up to $18,500 if under age 50. You may contribute up to 75% of your eligible compensation up to the IRS annual limit (currently $18,500, though other plan limits may apply). Match contributions will be calculated on both pretax and Roth contributions up to a maximum of 2% of your eligible pay, and are deposited to your account on a tax-deferred basis.
Consider a Roth account if:
• Your pay exceeds Roth IRA limits and you cannot open Roth IRA elsewhere.
• You think your income will be subject to a higher effective tax rate when you retire than it is today."
Does this mean that I can now fund a Roth 403b through my employer with $18,500/year with no income limit (at the cost of forgoing regular 403(b) pre-tax contributions)? How should this effect my retirement savings/planning?
Thank you, in advance, for your input.