1. What is a Roth 403b?

A Roth 403b is a retirement savings plan available to employees of certain tax-exempt organizations. Contributions are made with after-tax dollars, and qualified distributions in retirement are tax-free.

2. How Does the Calculator Work?

The calculator uses the future value of an annuity formula:

Where:

• \( Contribution \) — Annual contribution amount (USD)
• \( r \) — Annual rate of return (decimal)
• \( n \) — Number of years

Explanation: This formula calculates the future value of a series of equal annual contributions earning a constant rate of return.

3. Importance of Retirement Planning

Details: Proper retirement planning helps ensure financial security in later years. The Roth 403b offers tax-free growth potential, making it a powerful tool for long-term savings.

4. Using the Calculator

Tips: Enter your planned annual contribution, expected annual return rate (as a decimal, e.g., 0.07 for 7%), and number of years until retirement. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between Roth 403b and traditional 403b?
A: Roth contributions are made after-tax with tax-free withdrawals, while traditional contributions are pre-tax with taxable withdrawals.

Q2: What are the contribution limits?
A: For 2023, the limit is $22,500 ($30,000 if age 50+), but consult current IRS guidelines as limits change annually.

Q3: How should I estimate my rate of return?
A: Historically, stock market returns average 7-10% annually, but conservative estimates are often safer for planning.

Q4: Are there penalties for early withdrawal?
A: Yes, withdrawals before age 59½ may incur a 10% penalty plus taxes on earnings, with some exceptions.

Q5: Can I have both Roth and traditional 403b accounts?
A: Yes, you can contribute to both, but combined contributions cannot exceed the annual limit.