The tax benefits of participating in the RIC 403b plan differ depending on whether you elect for your deductions to be taken from your paycheck before or after taxes.
Saver's Tax Credit: You may be eligible for up to a $1,000 tax credit read more...
| Pretax | Post-tax Roth | |
|---|---|---|
| Contributions | Made before state and federal tax withholding | Made after state and federal tax withholding; See Roth 403b Summary for more information. |
| Immediate benefit | Lower taxable income for the year | None |
| Earnings (if any) |
Grow tax-deferred | Grow tax-free |
| Distributions | Taxable as ordinary income | Tax-free if qualified |
Qualified Roth Distribution
Earnings on after-tax Roth contributions are tax-free if the participant meets all 3 of these requirements:
- A distributable event has occurred
- Roth account is held 5+ years (from first 457 Roth contribution), and
- The participant is age 59½ or older, disabled, or deceased.
If one or more of these requirements are not met, it is considered a non-qualified Roth distribution and subject to taxation on the earnings portion of the distributed amount.