Your employer-sponsored retirement plan should offer tax-sheltered contributions. But if your employer-sponsored retirement plan also offers Roth contributions, you may be wondering which approach is right for you. Let’s take a look at both options.
Tax-Sheltered Contributions
Your contributions2 will be pre-tax, lowering your current taxable income
When retired, your distributions will be taxable
You may be eligible to contribute the lesser of your includible compensation or:
2,3
- $24,500 (maximum base deferral limit)
- $32,500 (if turning ages 50-59 or 64+ during 2026)3
- $35,750 (if turning ages 60-63 in 2026)
You’re required to begin taking required minimum distributions (RMDs) at age 73, unless you’re still working for the employer sponsoring your retirement Plan
This option might be right for you if:
- You expect to be in a lower tax bracket during retirement
- You currently need as much take-home pay as possible, even if it means paying taxes on distributions in retirement
Roth Contributions
Your contributions2 will be after-tax
When retired, your earnings may be tax-free1 if they meet the requirements of a qualified withdrawal2
You may be eligible to contribute the lesser of your includible compensation or:
2,3
- $24,500 (maximum base deferral limit)
- $32,500 (if turning ages 50-59 or 64+ during 2026)3
- $35,750 (if turning ages 60-63 in 2026)
Required minimum distributions are not required
This option might be right for you if:
- You expect to be in a higher tax bracket during retirement
- You can afford less take-home pay now, in exchange for tax-free distributions2 in retirement
Article
• Dec 19, 2025 