A good thing just got better.
The University of California Retirement Savings Program (RSP) is an important pillar of our retirement benefits offering. Now, we’re enhancing those benefits with a new Roth contribution option to the UC 403(b) and 457(b) Plans. The Roth option allows you to pay taxes on contributions now so that you have the potential to take the money out tax-free in retirement.1
This gives you even more flexibility to save and plan for your future. It’s just another way we are meeting the needs of our diverse and dynamic community.
How does Roth work?
A Roth contribution is an after-tax contribution to the UC 403(b) Plan or UC 457(b) Plan that gives you the opportunity for tax-free income in retirement. This is because your Roth distributions (including any earnings) can be withdrawn free of federal income tax if certain requirements are met.1
Who might benefit from Roth contributions?
Roth contributions are designed for anyone who likes the idea of potentially tax-free retirement income.1
Here are five scenarios:
- Are you a younger saver? In general, the younger you are when you start making Roth contributions, the more you may benefit. Why? Because you have a longer time frame for potential growth and to benefit from the power of compounding.
- Think your income tax rate will be higher in retirement? If you think your tax rate will be higher in retirement—either due to higher income or higher overall tax rates—when you take your distributions, consider making Roth contributions.
- Want tax flexibility in retirement? Once you retire, your expenses may vary more year-to-year than they do today. Roth dollars can help you cover larger expenses without increasing your taxable income for the year. And, if you have a combination of pretax and Roth contributions you have flexibility to choose which distribution type to take based on your tax situation.
- Interested in leaving tax-free money to your beneficiaries? Roth dollars are potentially free of federal income taxes to beneficiaries of inherited retirement savings.1 The pros and cons are subtle and complex, however, so consult an attorney or estate planning expert before attempting to use your RSP as part of your estate plan.
- Not eligible to contribute to a Roth IRA? While income limits may prevent you from contributing to a Roth IRA, the UC 403(b) and 457(b) Plans don’t carry these income limits. So, if you’re not eligible to contribute to a Roth IRA due to income limits, but would like potentially tax-free income in retirement, consider Roth contributions.
Explore all that Roth has to offer with our interactive guide.
Check back for 2024 Roth webinar schedule
View the Women Talk Money's webinar, All about the Roth, on demand here.
Questions? Talk with Fidelity
Call 866.682.7787 to discuss pretax, Roth and after-tax contributions, and which option(s) may be best for you.
Make it happen
Go to Netbenefits.com to start or modify your contributions and select pretax, Roth or a mix of both.