Pay Me Now or Pay Me Later...
The essence of the two contribution types is whether you want to pay taxes before you contribute - Roth 457(b) Contributions - or later when you make distributions - Traditional Pre-Tax 457(b) Contributions.
Roth 457(b) Contributions
Participants pay taxes before the contribution is made.
Money grows without being taxed.
There are no taxes on qualified distributions.
For a distribution to be qualified, a participant must have made Roth 457(b) Contributions for at least 5 years and be age 59.5 or older.
For non-qualified distributions, participants must pay tax on their investment gains only.
Under the current tax code, there is no 10% IRS Early Withdraw Penalty on withdraws made prior to age 59.5.
Traditional Pre-Tax 457(b) Contributions
Participants' contributions into the Plan are tax-deductible.
Money grows without being taxed.
Distributions are taxed as earned income.
Under the current tax code, there is no 10% IRS Early Withdraw Penalty on withdraws made prior to age 59.5.
Distributions are not subject to PA income tax unless distributions are made prior to age 59.5.
Dauphin County's Employer Contribution is Made Pre-Tax
You can make both Roth and Pre-Tax Contributions
The combination of Roth and Pre-Tax Contributions must be at least $10 per pay and cannot exceed the annual maximum amount.
When using this calculator, you will leave this website and go to a website that contains many financial calculators that we believe you will find helpful, but we cannot guarantee their accuracy. Also, the web page contains advertisement, which we cannot control.
When using this calculator, you will leave this website and go to the American Funds’s website that contains a Roth versus a Pre-Tax financial calculator that we believe you may find helpful, but we cannot guarantee their accuracy. When using it, the 403(b)/401(k) would represent the 457(b) Pre-Tax contributions.
Consult Your Tax Advisor
HR, Retirement Collaborative LLC, and Alerus employees are not authorized to provide tax or legal advice. Retirement Collaborative LLC will provide education and answer general questions regarding contribution types, but we recommend you consult your tax advisor for personal tax advice.