Roth Deferral: What It Is and How to Use It

Shawn Plummer

CEO, The Annuity Expert

Do you want to save money on your taxes? If so, you should consider using a Roth deferral. Roth deferral is a great way to reduce your taxable income and save money on your taxes. This guide will discuss what Roth deferral is and how to use it to save money on your taxes. We will also provide tips on getting the most out of Roth deferral.

What Is Roth Deferral?

Roth deferrals are a type of post-tax contribution to retirement plans, and they get their name from the Roth IRA, another retirement savings account that allows for tax-free withdrawals.

How Does Roth Deferral Work?

Employees that participate in a 401(k) plan typically have the option to make their contributions on a pre-tax or post-tax basis.

  • With a pre-tax contribution, employees pay taxes on the money when they withdraw it during retirement.
  • With a post-tax contribution, employees pay taxes on the money when they contribute it, but they can withdraw it tax-free during retirement.

Like a traditional 401(k), employees can make Roth deferrals through payroll deductions. And like a Roth IRA, employees will pay taxes on the money when they contribute it, but they can withdraw it tax-free during retirement.

 For many people, Roth deferrals are a great way to save for retirement because they offer the potential for tax-free growth. And since the money has already been taxed, there’s no need to worry about income tax rates changing in the future.

Which Retirement Plans Offer Roth Deferral?

A few different retirement plans offer Roth deferral, allowing you to contribute after-tax dollars into your account. This money grows tax-free and can be withdrawn tax-free in retirement.

The main benefit of a Roth deferral is that you don’t have to pay taxes on the money when you withdraw it in retirement. This can be a massive benefit if you expect to be in a higher tax bracket in retirement than you are now.

A few different retirement plans offer Roth deferral, including 401(k)s, IRAs, annuities, and life insurance.

Next Steps

The Roth deferral is an excellent option if you’re looking for a way to save on taxes and grow your money tax-free. Contact our team today for more information about how to take advantage of this powerful savings tool. With a Roth IRA, you can look forward to a comfortable retirement without worrying about pesky taxes eating into your nest egg.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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