Decide whether you want to save on a pre-tax basis, Roth after-tax basis, or both.

Review the Roth decision tree to help determine which savings option is most appropriate for you.

Use the Paycheck Impact Calculator to see how saving pre-tax or Roth after-tax dollars will affect your paycheck.



Pre-tax contributions
Defer income taxes until you take a withdrawal from your account.
Roth after-tax contributions
Pay income taxes at the time you make a contribution;
withdrawals and any earnings are tax-free (conditions apply - see below)
Contributions are tax-deferred – your current taxable income is reduced by the amount you contribute. Pay federal and state income taxes on your contributions.
All withdrawals are taxed as ordinary income and subject to federal and state income taxes. A withdrawal of your contributions are always tax-free.  Earnings are also tax-free as long as the withdrawal is made after 5 consecutive tax years since the first contribution was made and the withdrawal is made after age 59½, or due to death, or disability.
May be appropriate if you:
  • Expect to be in a lower tax bracket in retirement
  • Want to lower your current taxes
  • Qualify for the low income Saver's Tax Credit
May be appropriate if you:
  • Expect to be in a higher tax bracket in retirement
  • Are in a low tax bracket today or have other current tax deductions
  • Want tax-free withdrawals in retirement
  • Want the option of not taking required minimum withdrawals at age 72 if you rollover to a Roth IRA
  • Want to save after-tax dollars in a Roth IRA but your earnings exceed the Roth IRA income limitations. 

 For more information…

  • Roth 457 brochure  Learn about differences in pre-tax vs Roth after-tax investing.