WEBVTT

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Your retirement
plan lets you contribute money

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either on a pre-tax basis
or through the after-tax Roth option.

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So what's the difference
when you make pre-tax contributions?

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The money comes out of your paycheck
before your income is taxed.

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This lowers
your taxable income for the current year,

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which can save you money now.

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But you'll have to pay the taxes
when you take the money out in retirement.

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You'll also pay taxes
on any investment earnings.

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With the Roth contribution option,

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your contribution is taken out of your
paycheck after your income is taxed.

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This does not lower
your current taxable income,

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but your contributions
and any earnings on them are tax-free.

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When you take the money out later,
as long as you're at least age 59.5

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or become disabled
and your withdrawals are made

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at least five years
after making your first Roth contribution.

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Unlike Roth IRAs,
you can make Roth contributions

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to your employer retirement plan

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no matter how much you make.
With employer plan Roth contributions.

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there are no salary limits.

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Employer plan contribution
limits are also much higher than IRA

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limits, allowing you to save more
in the retirement plan than in an IRA.

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Both pre-tax and Roth contributions
have potential tax advantages.

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If you think you'll be in a lower
tax bracket in retirement,

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pre-tax contributions may be the way to go
because you'll be paying the taxes

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when your rate is lower than it is
right now.

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If you anticipate being in a higher tax
bracket in retirement than you are now,

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making after-tax Roth contributions
may help you because you'll be able

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to take out the contributions and earnings
tax-free.

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Knowing what your situation will be
is hard to predict.

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So if you're just not sure,
you could do both, which includes

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contributing both pre-tax
and after-tax dollars in your plan.

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In this way,
you get the advantages of both

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and can decide later
which contributions to withdraw first.

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Now is a good time
to review your overall retirement saving

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and investing strategy to see
if you're on track for your savings goals

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and if changing your contribution options
makes sense for you.

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If you'd like help deciding whether
to save with pre-tax or Roth dollars,

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schedule time
with a TIAA financial consultant.

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Visit TIAA.org/schedulenow
to find an appointment date.

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Consultants are available
at no additional cost to you

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as part of your retirement plan benefits.