Roth 403(b) Tax-Sheltered Plan
A Roth 403(b) is a Tax-Sheltered Plan that allows employees of educational institutions and certain tax-exempt organizations to save post-tax dollars for retirement. A Roth 403(b) works much like a Roth 401(k) and can offer another way to save for retirement.
The RBFCU Retirement Program is available to employees in school districts and certain tax-exempt organizations within the state of Texas. With our financial advisors, you can create a plan you’ll feel confident about.
What you should know about a Roth 403(b):
Contributions are made to your Roth 403(b) after taxes are taken from your paycheck, allowing your earnings to grow — and withdrawals to be taken — tax-free if the account has been open for at least five years and you are age 59½ or older. Roth 403(b) money is subject to required minimum distribution rules.
You may make a withdrawal from your Roth 403(b) at age 59½, upon severance from employment, or in the case of hardship, disability or death. Penalties may apply to withdrawals taken before allowable age.
If plan allows, a loan may be taken against your Roth 403(b) funds regardless of your employment status. Repayment terms and interest rates are determined by your investment provider. Certain rules may apply.
Investing wisely in your retirement plan starts with useful information. Take advantage of the insights, guidance and educational resources available to you. With a little help from a financial advisor, you can make the right choices to meet your financial goals.
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To learn more about the RBFCU Retirement Program and benefits of enrolling, contact us at:
What will my income be after I retire?
What will my expenses be after I retire?
What is the difference between a 403(b) plan and a Roth 403(b) plan?
With a 403(b), contributions are made pre-tax. Taxes are then paid on withdrawals, typically in retirement when you will likely be in a lower tax bracket. With a Roth 403(b), your contributions are made after taxes have been paid, and then withdrawals taken within the limits of your plan are tax free.
How much can I contribute to a 403(b) plan?
In 2023, you may contribute up to $22,500 to a 403(b) and/or Roth 403(b). If you are over age 50, you may contribute an additional $7,500 annually in 2023. This limit is combined for both plans.
Can I transfer my 403(b) plan at any time?
Yes. If you are still employed, you may transfer your 403(b) between eligible 403(b) providers. If you are no longer employed or otherwise meet a qualifying event, you become eligible to roll funds over to an IRA or other eligible retirement plan.
Are there any additional contribution catch-up provisions for the 403(b) plan?
Depending on your district plan, the 403(b) may have a 15 year service catch-up which may add up to $3,000 annually for 5 years. You must qualify every year through your district’s administrator.
What is the difference between a 457(b) plan and a 403(b) plan?
Both types of plans are tax deferred, but the 457(b) lets you start withdrawing money from your account as soon as you stop working for the sponsoring employer, no matter your age or in the case of death, disability or unforeseen emergency, regardless of your age if certain requirements are met. Meanwhile, 403(b) plans allow standard, penalty-free withdrawals at age 59½, as well as limited early withdrawal exceptions.
Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
Ameriprise Financial Services has a partnership with this financial institution to provide financial planning services and solutions to clients. The financial institution is not an investment client of Ameriprise but has a revenue sharing relationship with us that creates a conflict of interest. Details on how we work together can be found on ameriprise.com/sec-disclosure.
Ameriprise Financial is not affiliated with the financial institution.
RBFCU Retirement Program, a financial advisory practice of Ameriprise Financial Services, LLC, is a division of RBFCU Investments Group LLC.
The initial consultation provides an overview of financial planning concepts. You will not receive written analysis and/or recommendations.
A Roth IRA is tax free as long as investors leave the money in the account for at least 5 years and are 59 1/2 or older when they take distributions or meet another qualifying event, such as death, disability or purchase of a first home.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.