Human Resources and Payroll

Benefits

 

Roth 403(b) SUPPLEMENTAL RETIREMENT PLANS

What is it?

A Roth 403(b) account allows you to designate some or all of your retirement contributions on an after-tax basis, rather than traditional pre-tax contributions. Interest and earnings on these contributions when withdrawn are generally tax-free.

Why do I need it?

When deciding whether a Roth 403(b) makes sense for you, there are various factors to consider, including your current income, whether you wish to pay taxes now or later, and future tax policy. Consider the following, along with your individual situation, to determine if contributing to a Roth 403(b) makes sense for you.

A Roth 403(b) might be a good option for:

A Roth 403(b) might not be a good option for:

The following is an hypothetical example of how pre-tax and Roth after-tax contributions affect your current take-home pay. Assume eligible gross compensation is $60,000 per year or $5,000 per month with a 25% federal tax withholding rate.

  Pre-Tax Contributions Roth 403(b) Contributions
Contribution 10% 10%
Compensation $60,000 $60,000
Less: Pre-tax contribution for the year ($6,000) $0
Taxable Income $54,000 $60,000
Less: Income taxes (25%) ($13,500) ($15,000)
Less: Roth 403(b) contribution $0 ($6,000)
Net after-tax (take home pay) $40,500 $39,000
Difference in take home pay:   ($1,500)

What is it at Mason?

University employees have the opportunity to participate at the maximum level in BOTH the pre-tax 403(b) plan, and Roth 403(b) plan, at the same time. The annual limit in 2010 for both pre- tax and Roth is $16,500 ($22,000 for persons age 50 and older under the Age 50+Catch-Up provision) and the sum of pre-tax and designated Roth 403(b) contributions cannot exceed this amount.

The university participates with two TSA providers for Roth 403(b) accounts (Fidelity Investments and TIAA).

The Cash Match Plan is only open to salaried employees enrolled in the Fidelity or TIAA 403(b) plans and/or the 457(b) DCP. An employee contribution of $40 or more per pay period will generate a $20 cash contribution from Mason. Employees contributing less than $40 will receive a 50% employer Cash Match. (Nine-month faculty paid over 18 payrolls must contribute a minimum of $53.32 per pay period to receive the maximum match of $26.66. Employees paid bi-weekly must contribute a minimum of $36.92 per pay period to receive the maximum match of $18.46). Salaried employees who contribute to both the 403(b) and 457(b) plans will receive a Cash Match from only one of the plans.

If you currently have a 403(b) supplemental retirement plan and wish to make contributions to a Roth 403(b) you will need to complete a Salary Reduction Agreement, and send it to the Benefits Office.

If you are a new enrollee, please contact Human Resources for enrollment paperwork.

The University neither endorses nor offers recommendations regarding the selection of an annuity plan; the choice is that of the participant. Contact the plan providers for more information.

To contact your Benefits Administrator, please call 703-993-2600.

Roth 403(b) Frequently Asked Questions