The tax law that allows 401(k) plan sponsors to accommodate after-tax salary deferral contributions allows 403(b) plan sponsors the same opportunity. To add the designated Roth contribution option to an existing 403(b), plan sponsors have to amend their existing plan documents. Key employees and owners who, because of high personal adjusted gross incomes (AGIs), are not eligible for individual Roth IRAs will appreciate the fact that there are no AGI limits for 403(b) plan participants. Pre-tax and after-tax (Roth) contributions are jointly subject to the contribution limits for regular 403(b) plans.
As mentioned earlier, designated Roth contributions to both 401(k) and 403(b) plans are subject to required minimum distribution (RMD) rules, meaning that distributions must begin after age 70 1/2.
For more information on Roth contributions, refer to Ohio National's Roth Contributions (Form 3752).
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