Saving today for the retirement you want tomorrow
We’re here to help you make the most of your RPB employer-sponsored retirement plan. As you're considering your contribution options, keep in mind that both you and your employer can put money into your account each year. The contributions from your paycheck can be made as pre-tax contributions, post-tax Roth contributions, or a combination of both.
We recommend that your annual contributions total at least 18% of your total annual compensation: 15% from your employer and 3% or more from your paycheck. Every dollar you contribute today will grow more than contributions you make when you’re closer to retirement.
And make sure to check your account at least once a year to make sure your investment allocations and contributions are keeping you on track for the retirement you deserve. Remember: the sooner you begin to contribute—and the more you put in—the greater chance you have of being financially prepared for retirement.
Employee contributions (elective deferrals) and employer contributions
Your contributions may come from two sources: your paycheck and your employer.
- Employee Contributions (elective deferrals)—the amount you decide to contribute from your compensation—can be made on a pre-tax and/or post-tax Roth basis to your 403(b) account. Your employer will automatically deduct the money from your paycheck.
You can increase or decrease your elective deferrals at any time during the year through your employer. Your employer may want you to fill out a new Elective Deferral Agreement Form each time.
- Employer Contributions can only be made to your 403(b) account on a pre-tax basis. Employer contributions are in addition to your regular salary (and parsonage for clergy) and are often determined as part of your benefits when you’re hired.1
If your employer contributes more than the annual IRS limit, the excess contributions will automatically go into a Rabbi Trust account.
There are no minimum retirement contribution requirements, and you can change the amount you contribute as often as you like as long as your total contributions stay within the IRS annual limits. Even if you got a late start, you can make additional catch-up contributions if you're age 50 or older.
- If you leave your job before the end of a plan year, your employer may take back the unearned contribution amount.
Pre-tax vs. post-tax Roth contributions
Consider making both pre-tax and post-tax Roth contributions to your 403(b) account to help mitigate your tax burden in retirement. Use this calculator to help you forecast your overall tax burden when you access your savings throughout retirement.
Dollars come out of your paycheck and go into your account before they are taxed. These pre-tax contributions reduce your taxable income, and theoretically give you more dollars to invest with. You pay taxes when you take withdrawals from your account after you retire—possibly at a lower tax rate than what you pay now. The taxes you pay will be on all of it—the original contributions and any earnings growth.
Employer contributions can only be made with pre-tax money. You’ll owe income taxes on these employer contributions and any earnings upon withdrawal.
You pay taxes on the money you’re contributing before it goes into your 403(b) account. However, you pay no taxes on the money and any earnings when you withdraw it from your account in retirement, provided it’s a “qualified distribution” (i.e., you’ve met the other requirements).
Only contributions withheld from your compensation can be made on a post-tax Roth basis.
Once you’ve designated an elective contribution as a Roth post-tax contribution, you cannot later change it to a pre-tax elective contribution.
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.
Since you’re not required to begin withdrawals from your retirement account until you reach age 72, benefits can be delayed until a later date, which may help you satisfy the 5-year rule.
An evaluation of contribution rates.
RPB commissioned an objective evaluation of our recommended contribution rates. The recommendations may surprise you—did you know that you can contribute more than 3% of your compensation?
IRS Contribution limits
The IRS limits how much you and your employer are allowed to contribute to your 403(b) account in a calendar year. These limits typically increase each year. Understanding the IRS limits can help you manage your contributions from year to year.2
Keep in mind that the maximum contribution amount allowed is this year’s IRS contribution limit or 100% of a participant's taxable salary, whichever is less.
403(b) Plan Annual Contribution Limits
- Employee contributions, known as elective deferrals, can only be made to the 403(b) plan and can never exceed IRS limits. Employer contributions more than the annual IRS limit will automatically go into the participant’s account in the Rabbi Trust plan.
- Combined employer pre-tax contributions and employee pre-tax and post-tax (Roth) contributions.
- To reach this contribution limit, a participant must first maximize their employee contributions including the additional catch-up amount of $7,500.
Discuss pre-tax and post-tax Roth 403(b) elective contribution options with your personal tax advisor or a Fidelity Retirement Planner to determine which one, or combination of both, is right for you.
Determine how much you want to contribute to your RPB retirement account on a monthly basis. Then complete the Elective Deferral Agreement Form—or use a similar form provided by your employer—and submit it to your employer.
Roll balances from your other retirement plans into your RPB 403(b) account. Having all of your retirement accounts in one place can make it easier to manage your assets during retirement.
Consolidate your accounts.
It’s easy to roll your other retirement accounts into your RPB accounts.