No, Roth 403(b)s do not have income limits, allowing high earners to contribute, unlike Roth IRAs, which phase out contributions for higher incomes. While there are no income caps for Roth 403(b)s, you must still adhere to the annual IRS contribution limits, and these plans are for employees of specific non-profit or public education organizations.
Roth IRAs have an income limit. To contribute the maximum amount to a Roth IRA, you must earn less than $168,000 as a single filer or $252,000 married filing jointly. There is no income limit for Roth 403(b) contributions.
Yes, there are income limits (based on Modified Adjusted Gross Income, or MAGI) for contributing to a Roth IRA, with the IRS phasing out eligibility for higher earners; for the 2026 tax year, single filers start seeing limits between $153k-$168k and joint filers between $242k-$252k, with no contributions allowed above those upper thresholds.
The Faculty and Staff Retirement Plan allows you to contribute on a Roth after tax basis. Through the Roth 403(b) option you can make contributions that are taxed based on your current tax rates, so you can make tax-free withdrawals later in retirement after meeting certain criteria.
Contributions can always be taken tax- and penalty-free. Roth IRAs must meet the 5-year aging rule before withdrawals from earnings can be taken tax- and penalty-free. Failing to meet the 5-year rule can result in taxes and penalties.
If you can afford it, making maximum contributions to a Roth 403(b) may be a good option. Since any earnings accumulate tax free rather than simply tax deferred, a qualified Roth 403(b) distribution could provide more cash upon retirement than an equivalent traditional pretax 403(b) distribution would.
Yes, Roth IRA eligibility is limited by income. For 2025, the ability to contribute phases out for single filers with modified adjusted gross income between $150,000-$165,000, and for married couples filing jointly between $236,000-$246,000.
Choose a 403(b) plan
The deferred salary is generally not subject to federal or state income tax until it's distributed. However, a 403(b) plan may also offer designated Roth accounts. Salary contributed to a Roth account is taxed currently but is tax-free (including earnings) when distributed.
If you are maximizing your 403(b) contributions, or you are concerned about the ability to access your contributions before retirement, you may want to contribute to the Roth IRA. However, not everyone is eligible to contribute to a Roth IRA. Your income must not exceed the stated Internal Revenue Service limits.
Excess deferrals are taxed both in the year contributed and in the year distributed. Earnings on excess deferrals are taxed in the year distributed. Under EPCRS, these excess deferrals are still subject to double taxation.
Unlike some other retirement accounts, you can't open a 403(b) plan on your own, it must be offered through your employer. You can contribute a portion of your salary to the plan directly from your paycheck. Depending on the plan, these contributions can be made either before or after taxes have been withheld.
The limit on elective salary deferrals - the most an employee can contribute to a 403(b) account out of salary - is $23,000 in 2024, ($22,500 in 2023; $20,500 in 2022; $19,500 in 2021 and 2020).
For 2026, your income is too high for a Roth IRA if you're a single filer with a Modified Adjusted Gross Income (MAGI) of $168,000 or more, or if you're married filing jointly with a combined MAGI of $252,000 or more; incomes between these thresholds allow for reduced contributions, while higher incomes completely phase you out from making direct contributions, though strategies like the "Backdoor Roth IRA" exist.
You generally don't report Roth IRA contributions on your tax return because they're made with after-tax money and aren't deductible, but you must report nonqualified withdrawals or Roth IRA conversions using IRS Form 8606 to determine if any portion is taxable or subject to penalties. Your custodian sends Form 5498 to the IRS and you for record-keeping, but you don't file it with your return.
The 4% rule is a retirement guideline: withdraw 4% of your savings in the first year, then adjust that dollar amount for inflation annually, aiming to make your money last 30 years, but it doesn't account for taxes (Roth IRA withdrawals are tax-free, unlike Traditional IRAs) or varying market conditions, so it's a starting point, not a rigid rule, especially for early or very long retirements.
Roth IRA Cons
❌ Contributions must be made with after-tax income, so there's no upfront tax deduction. ❌ Contribution limits are lower compared to many other retirement plans. ❌ Income limits restrict high earners from contributing directly.
According to Chen, if you consistently contribute the maximum allowable amount to your Roth IRA over 40 years, you should have over $3 million, given an average stock market return. The S&P 500 has gained about 10.5% annually since its introduction in 1957, per Business Insider.
Advantages of having both Roth 403b and Roth IRA
Opening a 403(b) and Roth IRA allows you to contribute more each year. You can contribute up to your 403(b) contribution limit and your Roth IRA limit, allowing you to maximize your retirement savings and plan for the future.