I have been putting in 10% for Employee matching all to pre-tax. I plan on retiring in 5 years. I was thinking about putting 5% in Roth and leaving 5% in pre-tax. First of all is it worth it with only 5 years left to put in Roth? Or if it is should I but all of the 10% in Roth?

Also how does that work in that if say the amount contributed is $300 to Roth, will they take out taxes so it will only really be $225 that gets to the Roth 403B account to be invested? Is that $225 contribution part of what I can take out eventually with no tax penalty? What about the $$ earned in the market from the Roth contributions. Does it separate out what is earned in the market using the Roth contribution and tax those earnings now also?

Again this is an employer plan, not a separate standalone Roth IRA.

This post was edited on 10/10/25 at 1:16 pm

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Posted by geauxnc0308

pineywoods of ET

Member since May 2008

593 posts

Posted on 10/10/25 at 5:27 pm to Amblin

If you want to put $300 in each pay period, $300 will still go in. You will pay taxes on your full check, then the $300 comes out of what is left and goes to Roth. At 59.5 you can pull out both the $300 you put in plus anything it earned tax free

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Posted by TorchtheFlyingTiger

1st coast

Member since Jan 2008

2889 posts

Posted on 10/10/25 at 6:29 pm to Amblin

Once it's in the Roth there is no tax on the gains (unless you withdraw them early). That's the whole point.

How long until you retire isnt the deciding issue. Your Roth can continue to grow well into retirement. The primary factor is marginal tax rate versus effective tax rate.expected when you draw it down in retirement.

Roth balance is great for tax diversification to augment traditional and other income sources. It is particularly useful to boost spending without triggering higher rates, SS benefits tax, IRMAA or tonqualify for ACA subsidies etc... I plan to touch our Roths last unless a big spending event happens and it saves a lot to augment that year with Roth and minimize AGI. Otherwise, I hope to pass it tax free to heirs and/or use it when one of us is widowed paying higher single tax brackets.

If in high bracket now but expect lower in retirement consider sticking w traditional then do Roth conversions after you retire and income drops.

This post was edited on 10/10/25 at 8:17 pm

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