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Did You Know?
July 13, 2010, Volume 57, No. 01

Did You Know?

“Did You Know” is a monthly series that includes valuable tips to help you get the most out of the benefits and services offered by the Division of Human Resources.

Set Money Aside for Retirement with the Roth 403(b) Option

It’s never too early to start saving for retirement. That’s why Penn is offering another way for you to meet your retirement goals. As of July 1, the Roth 403(b) is another option under Penn’s Tax Deferred Retirement (TDR) Plan and the Supplemental Retirement Annuity (SRA) Plan.

• What are Roth contributions?

Roth contributions allow you to save on an after-tax basis. Money set aside in a Roth 403(b) is taxed as it is deposited, while distributions taken during retirement are generally tax-free.

• How do I ensure that my withdrawals will be tax-free?

All earnings are tax-free if they are part of a “qualified distribution.” This means that your Roth account must be held for a minimum of five years (e.g., if you begin making contributions to your Roth account in April 2011, you can begin taking tax-free distributions at any time during the year 2016) and you must be age 59 1/2, die or become disabled.

• What are the advantages of the Roth option?

Roth 403(b) accounts are beneficial to younger individuals who have a long time until retirement and thus more time to accumulate tax-free savings under a Roth. Those nearing retirement age who want to maximize the flexibility in withdrawing from your retirement accounts might also have an interest in this option.

Participating in the Roth 403(b) is easy—just use Penn’s online enrollment system at www.hr.upenn.edu/Retirement. If you have questions about the Roth 403(b) option, Penn’s retirement vendors—Vanguard and TIAA-CREF—have licensed professionals who can meet with you one-on-one to discuss any questions you may have. Visit the Human Resources website at www.hr.upenn.edu/Benefits/Retirement/RetirementCounseling.aspx to set up an appointment. For more information, visit the Human Resources website at www.hr.upenn.edu/Benefits/Retirement/Roth.aspx, or contact Penn’s Retirement Call Center at 1-877-PENN-RET.

—Division of Human Resources

Related: HR: Upcoming Programs; Struggling to Find Summer Time Child Care?

Almanac - July 13, 2010, Volume 57, No. 01