Roth Retirement Options

In Ohio State’s continuing efforts to help faculty and staff prepare for their future, the university offers Roth retirement options for 403(b) and 457(b) plans.

Traditional 403(b) and 457(b) plans offer pretax contributions to reduce your taxable income when you earn it. Active employees can also make Roth (after-tax) contributions to these plans through a current 403(b) or 457(b) retirement plan provider.

Current 403(b) retirement plan providers are Corebridge Financial (formerly AIG Retirement Services), Fidelity, TIAA and Voya. Current 457(b) retirement plan providers are Fidelity, Ohio Deferred Compensation (ODC) and TIAA.

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How Roth Contributions Work

Roth contributions offer an alternate tax advantage than pretax contributions – they don’t reduce your current year’s taxable income like pretax contributions do. Roth contributions are made on an after-tax basis. You may also consider having both kinds of contributions – pretax and Roth.

Pretax Contributions
Roth Contributions
You pay taxes when you take a distribution.
You pay taxes when you make your contributions to take advantage of future potential tax benefits.

With a Roth balance, you can withdraw your account balance tax-free if you meet the requirements for a qualified distribution. To meet these requirements when you take your distribution, you must be at least 59 1/2 years old with a Roth account open for at least five years. For example, if you start making Roth contributions in July 2022, your account will qualify for tax-free distributions after July 2027. In addition to the age and account eligibility requirements noted above, death or disability can also meet the eligibility for qualified distributions. Participants in the university-sponsored retirement plans may keep their account(s) open after terminating employment with Ohio State, allowing them to meet the five-year requirement.

Note: If your distribution is not considered qualified, you will be taxed on your investment earnings, plus you will owe an additional 10% IRS penalty.

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Understanding the Differences between Traditional Pretax and Roth Contributions

The following chart is designed to help you understand some key differences between pretax contributions and Roth contributions.

Traditional Pretax Contributions vs. Roth Contributions
Feature Pretax Contributions Roth Contributions
Your Contributions Your contribution goes into your account before taxes, and your current taxable income is reduced Your contribution goes into your account after taxes, and your current taxable income is not reduced
IRS Contribution Limit for 2024 $23,000

If you’re age 50 or older, you are eligible for catch-up contributions of an additional $7,500

Note: You can make pretax contributions, Roth contributions, or a combination of both, but your total contributions may not exceed the annual limit

Employer Contributions Not available
When You Take a Distribution You will pay income taxes on your contributions and investment earnings when you take a distribution. An additional 10% IRS tax penalty may apply (403(b) only) on any distributions taken before age 59 ½. You will not pay taxes on your contributions when you take a distribution because your contributions were made on an after-tax basis.

You will not pay taxes on investment earnings if you make a qualified distribution.

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How to Make Roth Contributions

Active faculty and staff can make Roth contributions to their 403(b) account through Corebridge Financial (formerly AIG Retirement Services), Fidelity, TIAA and Voya; and/or to their 457(b) account through Fidelity, ODC and TIAA.

Your contribution election will become effective as soon as administratively possible.

Note: Changing your contribution election will not impact how your contributions are invested.

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In-plan Roth Conversions

In addition to the Roth contribution option, 403(b) and 457(b) participants can choose to complete an in-plan Roth conversion. The in-plan Roth conversion feature is not available at Ohio Deferred Compensation (ODC).

An in-plan Roth conversion involves transferring all or a portion of your university-sponsored pretax 403(b) and/or 457(b) retirement plan balances and moving them into a Roth account within the same plan. The assets you convert will remain invested according to your investment elections on file with the 403(b) or 457(b) plan provider completing the conversion.

Note: You will be responsible for paying any taxes in the year in which you convert pretax assets to Roth. Depending on your situation, this could be a significant amount. Therefore, you should consider consulting with a tax advisor or qualified financial professional before making an in-plan Roth conversion.

If you have an account balance with a legacy provider, you can still take advantage of an in-plan Roth conversion, but you must first transfer your account balance to a current provider. Your retirement plan account is considered a “legacy account” if contributions were made prior to January 4, 2021. If you have questions about whether your account is eligible to make an in-plan Roth conversion, please contact a current provider directly.

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Frequently Asked Questions