Before-tax Versus After-Tax Roth Contributions

The Retirement Plan gives you a choice between making your contributions on a before-tax or after-tax basis.

Before-Tax Contributions
You will not have to pay any taxes (except Social Security) on the portion of pay you put into the plan. According to federal law, such before-tax contributions are treated as University contributions. Therefore, your contributions are not considered taxable income, and you are not required to pay income taxes on that money until you receive payment of your accounts. This will normally be after your retirement, when your taxable income and your tax rate may be lower.

Your before-tax contributions, as well as Roth 403(b) contributions, are subject to applicable Social Security tax withholdings.

After-Tax Roth 403(b) Contributions (Available only through Fidelity Investments)
Your contributions will be made on an after-tax basis. Earnings on your Roth 403(b) account are tax free when withdrawn as long as the withdrawal is qualified. A qualified withdrawal is one that is taken (i) no earlier than the fifth calendar year after the year of your first Roth contribution, and (ii) after you have reached age 59½, become disabled, or die.

After-Tax Contributions (other than Roth)
Members who were making after-tax contributions prior to January 1, 2009, and members in non-US locations may continue to make after-tax contributions. The earnings on this type of contribution are taxable when withdrawn.