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Roth Elective Deferral Contributions

Roth elective deferrals are an optional plan feature that may be incorporated in an existing plan design by plan sponsors. These contributions are made with after-tax dollars, and any “qualified distributions” of the contributions plus earnings would be completely tax-free.

GuideStone provides several tools to assist you in determining if Roth elective deferrals are right for you. You may review Things to Consider (pdf), utilize our convenient calculator or review the following side-by-side comparison of Roth 403(b)/401(k), Roth IRA and Traditional 401(k) Retirement Accounts.

Feature comparisons of Roth 403(b)/401(k), Roth IRA and Traditional 401(k) retirement accounts*

Feature Designated Roth 403(b)/401(k) Account Roth IRA Traditional, Pre-tax
403(b)/401(k) Account
Contributions Designated Roth employee elective contributions are made with after-tax dollars. Roth IRA contributions are made with after-tax dollars. Traditional pre-tax employee elective contributions are made with before-tax dollars.
Income limits No income limitation to participate. Income limits:
  • 2015 – modified AGI married $193,000/single $131,000
  • 2016 – modified AGI married $194,000/single $132,000
No income limitation to participate.
Maximum elective contributions Aggregate* employee elective contributions limited to $18,000 in 2015 and 2016 (plus an additional $6,000 for employees age 50 or over). Contribution limited to $5,500 plus an additional $1,000 for employees age 50 or over (in 2015 and 2016). Same aggregate* limit as Designated Roth 401(k) Account
Taxation of withdrawals Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution — the account is held for at least 5 years and made:
  • On account of disability,
  • On or after death, or
  • On or after attainment of age 59½.
Same as Designated Roth 401(k) Account and can have a qualified distribution for a first-time home purchase. Withdrawals of contributions and earnings are subject to federal and most state income taxes.
Required distributions Distributions must begin no later than age 70½, unless still working and not a 5% owner. No requirement to start taking distributions while owner is alive. Same as Designated Roth 401(k) Account.

*Chart from IRS Publication 4530, Designated Roth Accounts Under a 401(k) or 403(b) Plan.

**This limitation is by individual, rather than by plan. You can split your annual elective deferrals between designated Roth contributions and traditional pre-tax contributions, but your combined contributions cannot exceed the deferral limit - $18,000 in 2015 and 2016 ($24,000 if you're eligible for catch-up contributions).