Roth vs. Traditional contributions

The difference between a traditional 403(b) and a Roth 403(b) has to do with when you pay taxes on the money.

• Traditional 403(b): With a traditional 403(b), your contributions are made pre-tax, meaning that the money is taken out of your paycheck before taxes are taken out. This reduces your taxable income for the year, and thus, your current income tax bill. However, when you retire and start taking money out of your 403(b), those distributions are taxed as ordinary income. In general, a traditional 403(b) might be a good choice if you expect to be in a lower tax bracket when you retire than you are now.
  
  
• Roth 403(b): With a Roth 403(b), your contributions are made after taxes have been taken out. You don't get a tax break on your contributions in the current year, but when you retire, your distributions (both contributions and earnings) are generally tax-free. A Roth 403(b) might be a good choice if you expect to be in the same or a higher tax bracket when you retire.

In both types of 403(b), your money grows tax-deferred while it is in the account. 

However, there are certain rules about when you can take money out without penalties. 

We encourage you to consult with a tax professional to help you determine what is in your best interest.