403(b) After-tax and After-tax Roth Conversion
New in 2025, the university offers an additional opportunity within the 403(b) plan for employees.
After-tax with an After-tax Roth Conversion is an advanced strategy that allows individuals to maximize their retirement savings in a tax-advantaged way.
- Max out contributions: Reach your applicable IRS limit through Pretax and/or Roth contributions.
- Contribute after-tax: Make additional contributions to your 403(b) on an after-tax basis.
- Convert to Roth: Elect for your After-tax contributions to be automatically converted to Roth.
- Enjoy tax-free growth: Once converted, both your contributions and earnings grow tax-free.
A quick look at your contribution options
The 403(b) plan has three ways to save:
Pretax
Contribute with money before taxes are taken out. This lowers your taxable income now, but you’ll pay taxes on withdrawals in retirement.
Roth
Contribute with money you’ve already paid taxes on. Your withdrawals in retirement are tax-free. A distribution from a Roth account is federally tax free and penalty free, provided the five-year holding requirement and age 59½ or disability/death have been met.
After-tax
Contribute even more money after taxes have been taken out and in addition to the Pretax and Roth IRS limit. You can convert these After-tax contributions to Roth immediately, allowing any earnings to grow tax-free.
Step-by-step guide to after-tax savings
1
Max out your Pretax and/or Roth contributions
Before you can use the after-tax option, you must first reach the annual IRS limit for your Pretax and/or Roth contributions.
- For 2026, the limit is $24,500.
- If you’re eligible for catch-up contributions (age 50+), you must max those out as well. See the 403(b) contribution limits below.
Make your elections through the Fidelity NetBenefits portal. Select the three dots next to the 403(b) plan and choose ‘Contribution Amount’. It’s important to time your elections for your desired pay date. See the SRA election calendars to determine when to submit your election(s).
2
Make After-tax contributions
After your Pretax and/or Roth contributions reach the annual limit, the After-tax contribution option will become available to you on the Fidelity NetBenefits portal.
- For 2026, you can contribute up to an additional $47,500.
- Important Note: Fidelity is the only approved 403(b) provider for after-tax contributions. Your contributions to your 403(b) are by plan and not by provider. If you contribute Pretax and/or Roth contributions to another provider, you can still elect After-tax contributions with Fidelity once the limit is met.
3
Elect an After-tax Roth Conversion
This is the most critical step to get tax-free benefits. Using the Fidelity NetBenefits portal, you must elect for an automatic conversion to Roth at the same time you make your After-tax election.
Why this is crucial: If you do not immediately convert your After-tax contributions to Roth, any earnings on that money will be taxed as ordinary income. An automatic conversion ensures your earnings grow tax-free from day one. If you roll contributions to After-tax from an eligible account and/or you decide to convert to Roth at a later date, you will pay taxes on the amount converted.
Contribution limits
The tables below provide an overview of the limits and tax implications of each contribution type.
| Contribution Type | Age 49 or Younger | Age 50-59 | Age 60-63 | Age 64 and Older |
|---|---|---|---|---|
| Pretax and/or Roth | $24,500 | $24,500 | $24,500 | $24,500 |
| Age Applicable Catch-Up | N/A | $8,000 | $11,250 | $8,000 |
| After-tax | $47,500 | $47,500 | $47,500 | $47,500 |
| Total Savings Potential | $72,000 | $80,000 | $83,250 | $80,000 |
Understanding your contribution types and tax implications
| Tax information | Pretax (before taxes) | Roth (after taxes) | After-tax/After-tax Roth Conversion (403(b) only) |
|---|---|---|---|
| Are contributions taxed when made? | No | Yes | Yes |
| Are withdrawals taxed? | Yes, because they were not taxed at contribution. | No, because they were taxed at contribution. | No, because they were taxed at contribution. |
| Are earnings taxed? | Yes | No* | Yes (unless converted through an After-tax Roth Conversion*) |
| Are catch-up contributions allowed? | Yes – Pretax and/or Roth catch-up contributions are available for employees age 50 or older. An additional catch-up is available to those ages 60-63. | No, catch-up contributions must be made before after-tax contributions begin. | |
| * A distribution from a Roth Account is federally tax free and penalty free, provided the five-year holding requirement and age 59½, or disability/death have been met. | |||
A few things to remember
- Plan ahead: To start making After-tax contributions, you must max out your Pretax and/or Roth contributions with enough time left in the year.
- Automatic conversion: You only need to make this election once.
- External contributions do not count: Contributions made to your previous employer’s retirement plan(s) or other retirement accounts do not count towards eligibility for the 403(b) after-tax option. Money from outside sources cannot be deposited into the 403(b) plan.
- Next year’s limits: If the IRS limits increase for the next calendar year, you will need to adjust your Pretax and/or Roth contributions to reach the new limit before your After-tax contributions can begin again.
Disclaimer: This information is for educational purposes and is not financial or tax advice. Also, this is an advanced financial strategy. We strongly encourage you to consult with a qualified financial or tax professional before making any decisions about your retirement savings.