Beginning July 1, 2011, the opportunity to contribute to a Roth 403(b) supplemental retirement account became available for benefits-eligible faculty and staff at Case Western Reserve.
A Roth 403(b) lets you access savings tax-free in retirement, provided you meet certain conditions. Unlike the current Plan C and Plan A 403(b) retirement accounts, Roth contributions are made with after-tax dollars, so you pay more in taxes today but less in retirement.
You can make tax-free withdrawals of your Roth contributions—and any earnings—provided you are at least age 59 1/2 and made your first Roth contribution at least five years prior. That could be a significant advantage over pre-tax contributions, whose withdrawals are currently taxed based on your federal income tax bracket.
Special Note for Plan C Participants
Keep in mind that only pre-tax contributions to Plan C are eligible for Case Western Reserve matching contributions. If you want to make Roth 403(b) contributions, you must also contribute at least four percent of your salary on a pre-tax basis to receive the full university match. The combined pre-tax and Roth supplemental retirement contributions are limited by IRS maximum contribution allowance of $19,500 for 2020.
Who should consider a Roth 403(b) account?
If you are financially well-prepared for retirement, the Roth feature may be worthwhile. Strong savers can owe significant income taxes in retirement. Having tax-exempt Roth savings could be a significant help.
- You may benefit by making Roth contributions if you:
- have substantial pre-tax savings in other retirement accounts,
- have a current income that is too high to allow you to contribute to a Roth IRA,
- are at the start of your career and expect your income to rise substantially over the years or
- are currently in a low tax bracket—10 or 15 percent.
TIAA and Vanguard consultants visit CWRU regularly. You can make an appointment to discuss whether a Roth 403(b) is right for you.