Author Topic: What the difference here?  (Read 420 times)

Sbpark

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What the difference here?
« on: March 28, 2020, 04:03:36 PM »
I'm trying to increase my 403b contributions through the Transamerica sight, however this is confusing me. Whats the difference between the "Employee Deferral" and "Roth 403b"? I'm basically increasing my dollar amount taken out pre-tax that's contributed to my retirement account.


terran

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Re: What the difference here?
« Reply #1 on: March 28, 2020, 04:36:43 PM »
Employee deferral is tax deferred also called "traditional" (no tax on the amount contributed, pay tax on amount contributed and gains when you withdraw) and Roth is not (pay tax on on amount contributed, no tax on amount contributed or gains when you withdraw). They share the $19.5k/year limit, so you have to pick how much of each you want to contribute to such that they don't go over that limit. Any contribution/match from your employer will be tax deferred/traditional.

Here are a couple of good resources for deciding between the two: https://www.madfientist.com/traditional-ira-vs-roth-ira/ and https://www.bogleheads.org/wiki/Traditional_versus_Roth

Sbpark

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Re: What the difference here?
« Reply #2 on: March 28, 2020, 04:45:09 PM »
Employee deferral is tax deferred also called "traditional" (no tax on the amount contributed, pay tax on amount contributed and gains when you withdraw) and Roth is not (pay tax on on amount contributed, no tax on amount contributed or gains when you withdraw). They share the $19.5k/year limit, so you have to pick how much of each you want to contribute to such that they don't go over that limit. Any contribution/match from your employer will be tax deferred/traditional.

Here are a couple of good resources for deciding between the two: https://www.madfientist.com/traditional-ira-vs-roth-ira/ and https://www.bogleheads.org/wiki/Traditional_versus_Roth

Thanks for this. I have no clue which one, or how much to allocate to either. Thanks for the links!