Roth IRAs and 403(b)s

Roth IRAs are retirement plans that can be used by anyone while Roth 403(b)s are retirement plans that are offered by the employer.

While there are no income restrictions for those who can contribute to a Roth 403(b), a Roth IRA does have income requirements that determine who is able to open an account. It’s also important to note that the maximum contributions limits for Roth 403(b)s are much higher than for Roth IRAs.

Roth Benefits

The benefits of a Roth 403(b) and Roth IRA are that principle and earnings grow tax free so there will be no taxes taken at the time of distribution if you are at least 59 ½ and have had the Roth account for 5 years. But this does mean that they are funded with money from your paycheck after taxes have been taken out. You don’t get the tax-break upfront, but you also won’t have to pay taxes when you take money out.

If you do not have access to a Roth 403(b), then a Roth IRA is the next best choice. The Roth 403(b) allows you to contribute more, but contributing up to the IRA limit is better than not contributing at all. It’s also important to remember that many small employers, ministries, or faith-based organizations don’t have the money or experience to offer a retirement plan at all, let alone one with either a basic or matching contribution.

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Learn more about Church Retirement Plans.

Along with faith-based retirement plans, Envoy also offers faith-based IRAs.