Tax-Sheltered or Roth Contributions

Which contribution is right for you?

Did you know that your employer-sponsored retirement plan could offer different contribution options? Let's take a look at both options to determine which approach is right for you.

Tax-Sheltered

Your contributions¹ will be pretax, lowering your current taxable income

When retired, your distributions will be taxable

You can contribute up to $23,000 annually, plus another $7,000 if age 50 or older³

You're required to begin taking distributions at age 73, unless you're still working for the sponsoring employer

This option might be right for your if:

You expect to be in a lower tax bracket during retirement
You currently need as much take-home pay as possible, even if it means paying taxes on distributions in retirement

Roth

Your contributions¹ will be after-tax

Tax-free²

You can contribute up to $23,000 annually, plus another $7,000 if age 50 or older³

As of January 1, 2024, Roth distributions are no longer required

This option might be right for you if:

You expect to be in a higher tax bracket during retirement
You can afford less take-home pay now, in exchange for tax-free distributions in retirement

Talk to your benefits office to get started or make changes today!

Learn more with this side-by-side comparison chart.

¹This information applies to tax-sheltered contributions and Roth elective deferrals within an employer-sponsored retirement plan. Not all plans off the Roth option. See your employer for details.
²Roth distributions are not taxable if the account has been held for five years and the participant is over age 59½, deceased or disabled.
³Annual contribution limits apply to tax-sheltered, Roth or a combination of the two. Numbers quoted are for contributions made during 2024. Contribution limits are subject to change each year.
This should not be considered tax advice. You should consult a tax professional to discuss your unique situation.