I am a teacher, age 67. I have an IRA-403(b), but have not contributed to it for a year. Am I eligible to open a Roth 403(b) account?
If your district offers a Roth feature with its 403(b) retirement plan, you may open a Roth 403(b). You may direct your contributions to a traditional 403(b), a Roth 403(b), or both. However, your maximum allowable annual contribution – including catch-up contributions (if applicable) – is not affected by the number of 403(b) accounts you have. You cannot contribute more than the annual maximum regardless of the number of accounts.
For 2015, the limit on elective deferrals is $18,000 plus a catch-up contribution of $6,000 for those age 50+.*
With a Roth 403(b) account, your contributions are made on an after-tax basis; there is no current tax break. However, contributions and earnings may be withdrawn tax-free if the account has been held at least five years and the account holder is age 59½ or older. Nonqualified withdrawals are subject to ordinary income taxes and a 10% tax penalty.
For more about how to decide whether a Roth 403(b) is right for you, see What Is a Roth 403(b) Plan?
* Eligible employees with 15 or more years of full-time service may be able to contribute up to $3,000 more for five years, or a maximum of $15,000.
Back to FAQs