Traditional 403(b) Plan VS. Roth 403(b) Plan









Comparing: Roth 403(b) Plan and Traditional 403(b) Plan


The traditional pre-tax 403(b) is funded by pre-tax (tax-deductible) dollars, taken right off the top of your gross income from your paycheck.  When you receive your W-2 from your employer, your STRS and your 403(b) TSA deductions will be subtracted from your total Gross Income.  When you retire and begin withdrawing your money it will be 100% taxed as ordinary income at your personal tax bracket at that time.  You will be taxed on the amount you withdraw from your 403(b) account each year and will be subject to Required Minimum Distributions (RMD) upon attaining age 70 1/2.  


Now some School Districts are allowing employees to contribute to a Roth 403(b).   Unlike the traditional 403(b), the Roth 403(b) contributions are deducted from your paycheck as after-tax dollars.   This means you will not receive a tax deduction.  When you retire, however, your withdrawals are 100% tax-free, including the earned interest.


In 2019, In 2019, those eligible are allowed to contribute a total of $19,000 per year, or $25,000 if you have attained age 50 by the end of year.  Your contributions may be made in any combination of these two types of accounts, not to exceed the total limit allowed for that year.  So for example, you could contribute $900 pre-tax and $950 post-tax (Roth 403b) or any combination not to exceed $18,500 for both combined.


What's best for me?    If you need a tax deduction you will probably want to contribute enough retirement savings into a pre-tax 403(b) account to help you lower your taxes.   If you don't pay much in taxes at this time, you may want to consider contributing to a Roth 403(b) plan, as once you're retired you will appreciate having tax-free money to enjoy as you please.  If you're concerned about the possibility of having to pay higher taxes during your retirement, you'll probably want to contribute something towards an after-tax Roth account, so you will be able to enjoy some tax-free income later in life.



For more information please contact:

Stacey Parnum, Registered Rep, CA Insurance Lic.# 0B29425


Toll Free:       833-672-7686 

Office:          818-353-5037

Mobile:         661-312-8882

Fax:              818-353-5001




Representative registered with and offers only securities and advisory services through PlanMember Securities Corporation (PSEC), a registered broker/dealer, investment advisor and member FINRA/SIPC.  6187 Carpinteria Ave., Carpinteria, CA 93013 – (800) 874-6910.  Parnum Financial and PSEC are independently owned and operated companies.  PSEC is not liable for ancillary products or services offered