Roth 457(b) Accounts: A Potential Tax-free Retirement Income
You’ve probably heard of a Roth IRA. Did you know there’s also a Roth option for 457(b) deferred compensation plans?
When you choose to make Roth 457(b) contributions, you’ll pay taxes upfront when your money goes into the plan. Then you’ll enjoy tax-free withdrawals – as long as you’re at least 59½, and do not take withdrawals from your Roth account for at least five years after your first Roth contribution is made to the plan.
You can allocate all of your salary deferral to the Roth, all to the traditional 457(b) pre-tax account, or you can make deferrals to both. Nationwide will accept Roth enrollments and plan conversions starting after January 1, 2019. Deferrals will start on the first available pay period in the month following the deferral election. (Ex, if you enrolled in Roth 457(b) in January, the actual deferrals will not start until February.)
After January 1, 2019, there are several ways to designate deferral contributions to the Roth 457(b): log-in to your account here on this site, call our customer service or a local rep (numbers under “Contact Us”), or discuss with a local rep on-site.
Is a Roth 457(b) account right for you?
Only you can answer that question. But you may want to consider making Roth 457(b) contributions if you:
- Think that taxes will be raised before you retire and want to take advantage of potential tax-free withdrawals
- Expect to be in a higher tax bracket when you retire
- Are younger, with many years until your retirement
Get the help you need
Talk with one of our Retirement Specialists about whether Roth 457(b) may be right for your retirement portfolio.
Determine the possible tax advantages of making after-tax contributions to your plan by using the Roth Analyzer, which will provide you with a detailed summary based on your answers.
Neither Nationwide nor its representatives may offer tax or legal advice. You should consult your own counsel before making any decisions.