In This Issue
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| 457(b) 2018 Contribution Limits |
The IRS has announced that the 2018 contribution limitations for your 457(b) Deferred Compensation Plan ("457(b) Plan") has been increased by $500 to $18,500. Here is an overview of the contribution limits that affect your 457(b) Plan, beginning January 1, 2018:
- Annual Limit for 457(b) Plans: $18,500
- "Age 50" Catch-Up Limit: $6,000 in addition to the annual limit of $18,500 for a total of $24,500.
- "Pre-Retirement" Catch-Up Limit: $18,500 in addition to the annual limit of $18,500 for a total of $37,000.
Contribution Type
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2018 Limit |
2017 Limit |
Annual Limit
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$18,500
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$18,000
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Pre-Retirement Catch-Up
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$18,500
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$18,000
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Age 50 Catch-Up
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$6,000
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$6,000
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*Requests for 2017 Catch-Up contributions must be received by December 31, 2017.
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Is Roth right for you? It is a trade-off. You do not get an up-front tax benefit to deduct Roth contributions like you do with pre-tax contributions. Converting
pre-tax assets to Roth requires you to pay taxes up-front. But in exchange, Roth assets will provide tax-free
income in retirement.* Here are a couple of steps for you to consider:
Review all your retirement assets - how will distributions be taxed?
You are most likely to benefit from adding Roth assets if you are in a lower tax bracket now and a higher one later when you withdraw. Future life changes and tax rules are full of uncertainty. Roth assets can help you diversify your taxes like you diversify your investments. When you take withdrawals, you can pull from different sources, including tax-free Roth assets, based on what makes the most sense tax-wise in a given year.
Explore Roth contributions vs. conversions, and adding Roth assets in your 457(b) Plan vs. a Roth IRA**
It is not all or none: you can make both pre-tax and Roth contributions to your 457(b) Plan. You may be able to add Roth assets to your 457(b) Plan and an IRA. Converting small amounts over time can help avoid pushing you into a higher tax bracket. To learn more, contact your plan representative today.
To learn more about contributing to Roth within your 457(b) Plan, visit
www.DCRetire.com
, click on Plans, then click on DC Employee Plans.
* Applies to qualifying distributions of Roth assets only.
** Consider consulting a tax professional for advice specific to your tax situation.
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