Roth Option

Looking to boost your retirement nest egg or reduce your taxable income during retirement? Contributions to a Roth account may be an option to consider. 

A Roth option permits you to:

• Contribute after-tax dollars.
• Take tax-free distributions if the following conditions are met:
  •  If withdrawn after the end of the five-year period beginning with the first year for which a Roth contribution was made to the plan; and
  • You turn age 59½, or
  • Your total disability or death
• Reduce taxable income during retirement and possibly help reduce taxation of Social Security benefits under current law.

Roth basic features

• You must be eligible to participate in the Retirement Savings Plan, and your Roth account contributions must satisfy all applicable requirements.
• Roth account balances are portable to other plans that offer a Roth account or a Roth IRA, if the receiving plan accepts such rollovers.
• Roth accounts are subject to Required Minimum Distribution rules. Rolling a Roth retirement plan account into a Roth IRA prior to age 72 (age 70½ if born before July 1, 1949) might avoid this requirement.

Is a Roth account right for you?

In determining if a Roth retirement plan account is right for you, we encourage you to carefully assess the advantages and disadvantages. A Roth retirement plan account may appeal to those who:

• Cannot contribute to a Roth IRA due to income limits.
• Are young and in lower income tax brackets than they expect to be in retirement.
• Are financially stable, but expect tax rate increases are likely.
• Want tax diversity and flexibility in retirement.

Roth retirement plan contribution limits

Roth contributions count toward the annual dollar limit on elective contributions, which cannot exceed the IRS limit. Contributions are also included in all catch-up contribution limits (both age 50 catch-up and special catch-up, if applicable).

Distributions and rollovers

Because Roth account contributions are treated as elective contributions, a distribution can be made at severance of employment, death or retirement. A distribution may be made for a hardship withdrawal but only if permitted by the plan. However, tax-free treatment is only provided to qualified distributions.

A qualified distribution is one that is made after the end of the five-year period beginning with the first year for which a Roth contribution was made to the plan (known as the five-year aging rule or five-year clock) and you reach age 59½, or become disabled or die.

Income taxes are payable on nonqualifying withdrawals from Roth account earnings. Federal restrictions and penalties may apply.

Learn more

Schedule an appointment with a financial professional to learn more about Roth retirement plan account features.

RO2584324 - (11/2022)