Roth Contribution Option

The University of California has enhanced the UC Retirement Savings Program with a new Roth contribution option for the UC 403(b) and UC 457(b) Plans, giving you more flexibility to save and plan for your future through regular pretax contributions, new Roth contributions, or both. 

Who Might Benefit From Contributions

While Roth contributions are designed for anyone who likes the idea of potentially tax-free retirement income, here are some scenarios to consider:

Are you a younger saver?

• In general, the younger you are when you start making Roth contributions, the more you may benefit. Why? Because you have a longer time frame for growth and to benefit from the power of compounding.

Think your income tax rate will be higher in retirement?

• If you think your tax rate will be higher in retirement—either due to higher income or higher overall tax rates—when you take your distributions, consider making Roth contributions.

Want tax flexibility in retirement? Once you retire, your expenses may vary more year-to-year than they do today.

• Roth dollars can help you cover larger expenses without increasing your taxable income for the year. And, if you have a combination of pretax and Roth contributions, you have flexibility to chose which distribution type to take based on your tax situation.

Interested in leaving tax-free money to your beneficiaries?

• Roth dollars are potentially free of federal income taxes to beneficiaries of inherited retirement savings. The pros and cons are subtle and complex, however, so consult an attorney or estate planning expert before attempting to use your RSP as part of your estate plan.

Not eligible to contribute to a Roth?

• While income limits may prevent you from contributing to a Roth, the UC 403(b) and 457(b) Plans don’t carry these income limits. So if you’re not eligible to contribute to a Roth due to income limits, but would like potentially tax-free income in retirement, consider Roth contributions.