The Roth 403(b) is simply another way to put money aside for retirement, but as with a Roth IRA, money set aside in a Roth 403(b) is taxed as it is deposited, while distributions taken during retirement are generally tax-free. Roth 403(b) plans, however, have higher contribution limits than their IRA counterparts, so you can accumulate more tax-free income for retirement.

Keep in mind that Roth after-tax contributions will not reduce your taxable income as pre-tax selections do, and your paycheck will be reduced by additional tax withholdings.

A combination of pre-tax and Roth after-tax deferrals are allowed, but only up to your annual limit: $16,500 or $22,000 for those age 50 or older.

Although you pay taxes on contributions you make to the Roth 403(b), all earnings are tax-free if they are part of a "qualified distribution". 

In addition, federally-required minimum distribution rules apply at age 70 ½. Remember that penalties will be assessed on withdrawals that do not meet the definition of a "qualified distribution".

Before you elect the Roth 403(b), you’re encouraged to discuss it with your tax adviser or financial planner.   

Perhaps the biggest advantage of a 403b plan versus a Roth IRA is the fact that employers often match employee contributions. These matching contributions can quickly and greatly enhance the overall value of your 403b account.

Another benefit of employer plans such as a 403b is the money that goes into the account is done so on a before-tax basis.  With a Roth IRA, the money used to fund the account is on an after-tax basis.

Participating in the Roth 403(b) is easy but be sure to ask Questions regarding Roth retirement accounts, and speak with a professional.

If you are considering Retirement Planning, call for a free consultation today.