RPB now offers a Roth 403(b) option for employees to make after-tax contributions and provides:

  • Tax-free income in retirement
  • Savings flexibility
  • A powerful estate planning tool

Getting Started

It’s easy to start allowing your employees contribute to Roth accounts:

  • Set up post-tax deductions in your payroll system.
  • Talk to your employees and get their pre-tax and after-tax contribution amounts – you can use the Salary Reduction Agreement.
  • Watch this video to learn how to add Roth contributions:

Why Roth?

The difference between our traditional 403(b), our Roth 403(b), and a Roth IRA lies in how (and when) participants’ money is taxed, as well as the IRS limits placed on annual income and elective deferral contributions.

Show your employees this chart which summarizes the benefits and features of each account.

RPB’s traditional pre-tax 403(b) RPB’s Roth 403(b) Roth IRA
No income restrictions to participate Max. income:

$199,000 married; $135,000 single

Elective contributions Made with
pre-tax money
Made with money that’s already been taxed Made with money that’s already been taxed
2018 IRS elective contribution limits Combined 1 $18,500; $24,500 if age 50+ Combined 1 $18,500; $24,500 if age 50+ $5,500; $6,500 if age 50+
Tax savings In the year your contributions are made In the year your earnings are distributed In the year your earnings are distributed
Distributions Contributions and earnings taxable upon withdrawal; 10% penalty before age 59½ 2 Contributions and earnings tax-free upon withdrawal for qualified distributions 3 Same as Roth 403(b) and can have a qualified distribution for first time home purchase
Hardship withdrawals (under 59½ and still working) Tax and 10% penalty on contributions and earnings Tax and 10% penalty on earnings if non-qualified distribution 3 Tax and 10% penalty on earnings if withdrawn before age 59½
Required minimum distributions at age 70½ (unless still working)
Loans (available to RPB participants summer 2018)
Tax-free money to heirs 4

1 You can make elective deferrals to both your Roth and pre-tax accounts but the combined contributions can’t exceed the IRS limit.

2 Clergy parsonage tax exclusion may apply. If you’re no longer working for an RPB-eligible employer during or after the year you reach age 55, there is no 10% penalty.

3 Qualified distributions: The contribution portion is not taxed again because it was made with after-tax dollars. The earnings portion can be withdrawn tax-free as long as you’ve owned your account for five tax years and you’re at least age 59½ (or due to disability or death). A tax year begins on January 1 of the year that you made your first Roth contribution.

4 Non-qualified distributions: A 10% penalty and income taxes are due on your earnings if withdrawn before the five-year holding period and before age 59 ½ (except in the case of permanent disability or death). If you separate from service during or after the year you reach age 55, there is no 10% penalty on earnings portion of early withdrawals.

5Earnings can be withdrawn tax-free as long as the account was owned for five years from the date it was established.

Things to Know

Some important things for employers to know: 

  • Employees can contribute to both a Roth and pre-tax accounts in any proportion. Total contributions can’t exceed the annual IRS contribution limit.
  • Employer contributions must be allocated to a pre-tax account, even if the participant is only making Roth contributions–the employee will owe income taxes on the employer contributions and any earnings upon withdrawal.
  • If an employee switches jobs, their account stays with RPB for as long as they like (just like our traditional 403(b) plan). If they go to another RPB-eligible employer, they can continue to contribute through their new employer.


Can participants make traditional pre-tax and Roth 403(b) contributions at the same time?

Yes, they can contribute to both accounts at whatever proportions they prefer. However, the combined contributions must be within the IRS annual contribution limits.

Roth IRAs have income restrictions that determine who can contribute. Do they also apply to Roth 403(b) contributions?

There aren’t any income limitations on who can make Roth 403(b) contributions.

What makes a distribution from a Roth 403(b) account “qualified”?

A qualified distribution is generally one that is made after a five taxable year period of participation and falls into one of the following categories:

  • Made on or after you turn age 59½
  • Made after you die
  • Made in case you become disabled

Your qualified distribution status applies to your beneficiaries. However, if a beneficiary or alternate payee rolls the distribution to their own Roth 403(b) account, their age, death or disability status is used to determine whether the distribution is qualified.

How is the five taxable year participation period calculated?

This begins on the first day of the taxable year when you first made a Roth 403(b) contribution, regardless of when during the year you made the contribution. It ends after five taxable years.

Will a Roth 403(b) distribution be considered as part of an employee’s gross income?

Not if it is a qualified distribution. If it’s an unqualified distribution, it will be partially included if there are earnings.

Can participants take out a loan from their Roth 403(b) account?

RPB will be introducing loans in Summer 2018. We’ll provide more details soon.