The information below should serve as a general guideline only.
For further questions on your tax situation, please seek guidance from a tax professional.
Pre-tax deferrals reduce your taxable income for the year in which you defer and offer tax-deferred growth on those investments. Withdrawals from pre-tax sources are taxed as ordinary income in retirement, but early withdrawal penalties may apply.
Roth deferrals are made with after-tax dollars, allowing for potentially tax-free withdrawals in the future.
Roth contributions are distributed tax-free, but earnings on Roth contributions are only distributed tax-free if the distribution is made:
-
after age 59 ½
AND
five years after the first Roth contribution was made.