Traditional vs. Roth Options: Choosing the Best Path

Both the UTSaver TSA and DCP* plans offer participants the opportunity to make salary deductions either before taxes, or after taxes in the form of Roth contributions.  Each has their advantages.

Traditional Pre-Tax TSA and DCP Contributions

With a traditional TSA or DCP contribution, you can lower your income for Federal income tax purposes while building a retirement savings account in a tax-sheltered environment.  When you retire and begin eligible distributions from the plan, you will only pay taxes on that part you receive directly.

Roth Post-Tax TSA and DCP Contributions

With a Roth contribution, you pay taxes up front.  Those post-tax dollars are then invested and will grow according to your investments.  When you retire and begin eligible distributions from the plan, everything is tax free, including both your post-tax contributions and all earnings. 

The Roth account must have been open for five years, and you have to be over 59 ½ at the time of distribution, but if you meet those eligibility requirements you can receive completely tax-free distributions.

Each plan has advantages that can help you maximize your earnings while helping to manage tax burdens.  Which type you choose is dependent on your personal circumstances.  The most important thing is to just participate.  If you’re not currently enrolled in the UTSaver DCP or TSA plans, Roth or Traditional, there’s never been a better time to start

Comparison of Traditional, Roth 403(b), and Roth IRA Contributions

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