Episode 92 – Building tax-smart retirement savings

There are a lot of ways to save for retirement, including pretax and Roth contributions, IRAs, and Washington’s Deferred Compensation Program (DCP), also known as a 457 plan. In this episode, we break down the differences, explain tax and withdrawal rules, required minimum distributions, contribution and income limits, and rollovers. We also share practical strategies, like automating your contributions and how to build flexibility into your retirement plan.

Episode transcript:

[music intro]

Jenny

Welcome back to Fund Your Future with DRS. So, you may have heard that saving in a Roth account is a great way to save for retirement, and it certainly can be. But there are many different types of Roth accounts. And recently at DRS, we [sent] a survey to our members and got tons of questions about this conversation of Roth versus pretax when saving with DCP or even just saving in any sort of other retirement account.

So, we’ve invited Malia back to the podcast. Malia runs our Deferred Compensation operations team. And so, we’re here to talk about all things Roth, both on the employer side and personal accounts as well. Welcome, Malia.

Malia

Thank you for having me back.

Seth

So, Malia, could you just remind listeners, what is a Roth account and what makes it different than when you think of traditional pretax retirement savings accounts like 401(k)s?

Malia

Yeah. That’s a really good question. And so, I think first, you know, one thing that and we’ll talk about this a little bit later is that there’s different types of retirement accounts, whether like you mentioned 401(k), IRA, 457. And the way Roth works in those accounts can be a little bit different. So, we can dive into that.

But just to break it down, you know, whenever you have a retirement account, typically you are given the choice to make your contributions pretax, which means you haven’t paid any taxes on it yet, and it’s going to lower your taxable income for the year. So, if that’s coming out, no money has been sent to the IRS on that contribution if it’s pretax. If you make that Roth, that means that taxes have already been paid on that money. So that gets included on your W-2 as taxable income. You’ve paid the IRS for those earnings and then that gets invested. And so that in a nutshell is how the contribution is different. And then the way it works in the account is a little different.

So obviously one of the benefits of your retirement account is that it’s going to grow. You’re investing that money. It’s going to grow. You’re going to get gains on it over time. And so, this is where Roth versus pretax really makes a big difference. And so, with Roth as long as you meet certain criteria, which is you have five years from your first contribution and you’re over 59.5, when you take your first distribution, all of the gains on that contribution you put in will be tax free when you pull it out. Versus, if it’s pretax, all of the money that you pull out at whatever time it may be, you have to pay taxes on it because you haven’t paid any as of this point. So there’s a lot of things to consider. And we’re going to kind of talk about that and chat about it.

But in a nutshell, that’s kind of the big difference between Roth versus pretax, regardless of kind of account types, is whether you pay taxes on it from the get go versus later. And if those gains are going to be taxed or not, depending on if you meet that criteria.

Jenny

And I think it’s important to note that we always try to remind folks that you can do both. I myself, I contribute to my DCP account in both a certain amount in pretax and a certain amount in Roth, and a lot of folks choose to do that.

Malia

That’s a really great point Jenny, is that you can do both. Exactly. And there’s reasons why someone may want to do one or the other. You know, there’s some people who they like to get their tax bill as low as possible, or maybe they have some other income coming in. And so pretax is really what they want to do because they want to lower what they’re going to pay in taxes in that year.

For others they’re like “hey I’m making hardly any money now. And I think I’m going to be making more later in life. So, I’m okay with paying those taxes now.” Maybe my tax brackets a little lower because you’re, you know, super young or something like that. So, there’s a lot of reasons why someone may pick one or the other, but you’re exactly right. It’s not an either or. It can be both.

Jenny

So, you talked about with the Roth account, you’re obviously putting that money in. It’s sitting there in an account you don’t have to pay taxes on it when you take it out later. Can you tell us how this impacts those required minimum distributions? When you turn 73, you have to start taking a minimum amount out of that account.

Malia

That is a really great question. I think, you know, a lot of people, especially when you go on Reddit or something and people are like, “should I do pretax or Roth” the conversation is so focused on the right now, the immediate impact that you’re going to feel, and there’s some impacts that can happen on the other end, like when you’re ready to start taking the money, like I talked about earlier, whether it’s taxed or not.

And one of those big things are those lovely required minimum distributions that you have to take right now is at 73. But in a few years that will change to 75, where the IRS is going to force you to take your money out, a certain amount, it’s usually a certain percentage of whatever your balance is in the previous year.

Now Roth money, you don’t have to take required minimum distributions. And so, you will not be forced out for your Roth balance, only your pretax. And naturally, it’s because the IRS wants to get their tax money on that. Versus with Roth, they’ve already gotten their tax money, which is why they’re not forcing it out. And so why this is important to think about is beyond the initial where you might be saving money on your tax rate is one of the benefits of having these retirement accounts, like I said, is that the money can grow.

And so, some people don’t realize how much being forced out a certain dollar amount, you know, that’s drawing out of your account that you may not have wanted. And so now that’s not getting to continue to sit there and be invested. Whereas if it was Roth money, it would be. Another conversation, Seth and I were talking about this the other day, you know, when it comes to Medicare, right?

And you’re being forced out these required minimum distributions, that counts as income when it comes to calculating your Medicare premiums. And so that might be another reason why somebody wants to make sure they have Roth money in there. So, they don’t have these unexpected withdrawals. Because if your money has done really, really well over, you know, 30, 40 years, it’s possible you could have some force outs of tens of thousands of dollars that you weren’t prepared to spend.

So, the required minimum distribution on Roth, it’s not required. On pretax, it is. Which kind of makes it sound like Roth is the is the way to go. But there’s other considerations as well, like the purchase additional annuity thing that we’ve talked about where the DRS has these really great things that you can do to use your Deferred Comp money to increase your retirement benefit through things like purchase additional annuities.

We have other podcasts on that. And lots of great stuff out on our website or things like purchase service credit. But those can only be paid for with pretax money. For rollovers, you can’t roll over your Roth money to do that. And so again, it’s kind of thinking about what might you be doing on the other end and what’s going to be best for your situation.

Seth

I really appreciate that perspective, because you need to think about today and your future self, and it’s really hard to know what your future situation is going to be like. I actually just saw an article headline. I was thinking about that we were going to have this conversation and it was like, you know, total clickbait. Like the absolute best way to figure out if you should contribute Roth or pretax.

And I, of course, clicked on it because I was like, there is no right way, which is basically what the article said. Like the article said, if I remember right: you need to determine whether your taxes are going to be higher now, when you’re making the contributions, or [if] your taxes are going to be higher when you’re taking the money out.

And I was like, good luck with that. Like, who knows what the federal tax rates are going to be 20, 30, 40 years. And I should clarify, we’re only talking about federal income tax here. There might be sales tax. There might be other, you know, there they’re all sorts of different things to think about. I’m sorry, I’m getting passionate about this because it is frustrating to me that there is people that say that there’s a definitive answer one way or the other, and it really depends on the individual circumstance and what the circumstances are going to be way in the future that you’ll never know.

And Jenny, I think the point you made is exactly right on having diversification in your retirement accounts, not just in the different things you’re investing in, but the types of accounts you’re investing in gives you more flexibility down the road as well. We had a coworker, a couple of coworkers who really drove this point home to me a lot was that they were thinking about investment diversification, but they’re thinking about tax diversification as well.

And so, saving in a Roth account and a traditional pretax account gives you more flexibility now and in the future.

Malia

That’s a really great point too that, especially about the federal income tax, because you may decide when you’re getting ready to retire or you’re going to go move to a state that has a really high income tax, right? And so now you’re paying taxes on that money versus not or there’s certain things like that that can also impact, again, something you never predicted.

Like you said good luck figuring out what your taxes are going to be when you retire. And so having that kind of mix, there’s a lot of benefits to it. Absolutely right.

Seth

Yeah. I went down this long rabbit hole a year or two ago about why people are so passionate about Roth. Because as Jenny, as you said, we had these survey go out. Lots of people were asking questions about Roth. They just hear the term and they think like, oh, I need to be saving in a Roth account. And I think there is historical evidence.

If you look at graphs, the current federal tax rates are pretty low in comparison to historical rates. And when you look at the US income tax rates in comparison to other countries, other advanced economies, our federal tax rates are also a little bit lower. And so there’s a sort of prediction that in the future they’re going to be higher.

But you don’t know like you just don’t know. And that I think is what is with a lot of personal finance stuff, you just don’t know what is going to happen in the future. And trying to give yourselves options and flexibility in the future is why having some money in a traditional account, some money in a Roth account, gives you it gives you that flexibility.

Malia

That reminds me of something that I read the other day as well, that kind of touched on that, you know, especially like I said, you go to Reddit and you see these investing subreddits and they all talk about like, if you’re under this age, you’re silly to not be doing Roth. And it’s like, well, there’s some considerations for even people who where all the stars align, and it looks like it’s pointing to Roth for them to think about.

You know, I touched on it earlier that age, 59.5 is kind of a magic number when it comes to Roth accounts, because that’s when you don’t have to pay taxes on those gains. As long as you’ve met that five-year requirement. And so you may be, you know, 18 years old thinking, I’m going to retire at 40 or 45, right?

And I’m going to do all Roth because it’s going to grow by $1 million. I’m going to be super aggressive. It’s going to do really well. And that’s all tax free. Well, now you’re 45 and you’re pulling it out. Well guess what. You didn’t meet that age 59.5 requirement. So, you do have to pay taxes on those gains.

And so are you kind of accidentally putting an early withdrawal penalty on yourself by putting it all in Roth and not having some pretax options or a little diversification in there. So that’s something to think about as well, is, you know, you don’t want to set yourself up in a situation where you can’t retire as early as you want.

And if you were going to use this money to kind of help supplement you until you’re eligible for your pension, that’s something to think about as well.

Seth

Yeah, lots of nuanced rules, lots of nuance, tax rules. When you’re talking about different types of accounts, it gets a little bit complex. And yeah, once again, giving yourself that flexibility is really a great option.

Jenny

Yeah, yeah. This is all really good food for thought about our, Roth versus pretax [conversation]. Then we wanted to shift gears a little bit and talk about the difference between a Roth IRA and other Roth accounts. So obviously, through Washington’s Deferred Compensation Program, you can save those Roth dollars that we are talking about. But there’s certainly a lot of other, Robo-advisors and private companies out there where you can go and get a Roth IRA account.

So, can you talk a little bit about the difference between those two Roth options?

Malia

Yeah, that’s a really great question. And, I’ve been doing this a long time, and it’s definitely a question, a big point of confusion for a lot of people about how a Deferred Compensation Roth is different than maybe an IRA that they have through, you know, Schwab or Fidelity or Vanguard or whatever. And kind of what that means.

And a lot of people don’t realize that you can actually have both. And so, it’s a really good question. So, let’s kind of break it down a little bit. So, number one, the 457 Deferred Comp, like you said obviously state of Washington, that’s a benefit we offer to those that are eligible for retirement. One of the biggest benefits of the 457 is there is no 10% early withdrawal penalty.

I kind of touched on that earlier. If you were to contribute, regardless of if it’s Roth or Pretax into an IRA or 401(k), if you again, there’s that magic age 59.5 for the most part, if you withdraw before that, you’re going to get an extra 10% early withdrawal penalty that doesn’t exist in the 457. And the other thing that’s a really big difference is the contribution rate limit.

So, if you were to open a Roth IRA with, you know, your bank or your credit union or whatever, you can only put so much money in a year and so right now, in this year, in 2026, that’s $7,500 that you can put in if you’re below 50 or $8,600 if you are 50-year-old or and that’s it.

That’s all that you can put in versus in the 457, your annual limit. You could do every dollar of that as Roth as you wanted, if you wanted, or you could do a mix. So, our annual limit is $24,500 if you’re under 50 [and] $32,500 if you’re 50 or older. And if you’re eligible for special catch ups, you could even potentially do all the way up to $49,000 of Roth dollars.

So that is considerably more than you would be able to do with your bank. But again, you can do both. So maybe, you know, you’re doing really well financially and you’re in a place that you can afford to do both. That’s something that’s an option as well. So those are kind of some of the big things that are the differences.

So again, the one that you may have with your bank, when you’re ready to take that money, you might have early withdrawal penalties and you have a much lower limit. And then there’s also some income limits on how much money you can make in order to contribute to a Roth IRA. That’s like with a bank or, you know, an online investment broker or something like that.

And so, versus in Deferred Comp, no matter how much money you make, you’re able to contribute up to those limits.

Seth

I think the income limit was one of the reasons some people were really excited about having a Roth option within DCP. If a really, highly paid individual is working for a local government or state agency, they couldn’t open a Roth IRA because they were making above the limit. And but they wanted to contribute Roth dollars because they wanted that diversification that we were talking about earlier.

So those folks were really excited about that Roth option was now available to them. But for I think most folks, they’re under that income limit, and they could start a Roth IRA whenever they want. One of the reasons I am a fan of talking to people about a Roth IRA as an option of way to start saving is you can do it no matter where you work, no matter what income you have.

And so, you know, we all work in the public sector, but it’s possible somebody goes and works in the private sector for a while. And now they have a 401(k) option. They don’t have a 457 option. And you can roll things over and you know, there’s all sorts of different types of accounts, but you can always can continue to keep contributing to your Roth IRA.

And so it helps, at least in my mind. It helps build that consistency of saving for retirement, especially if you start young. And as Malia was describing earlier, the people that are maybe have the most advantage of putting money into a Roth account are younger folks. They’re likely in a low tax bracket at the time, and they’ll likely be at a higher tax bracket later on in life.

So, getting that habit of savings started is sometimes easiest through a Roth IRA, because it’s available to almost everybody.

Jenny

Yeah, I think that’s a great point because it’s also you can contribute to that even when you’re not working. Like maybe you got laid off and, you know, maybe you’re using that extra money to pay some of those expenses in the meantime, but you can still put a little bit of money if you wanted to, into that Roth IRA account.

Seth

You can’t put in more money than you made, which I think sometimes our early retirees are frustrated about. They want to keep putting money into a Roth IRA. And you’re like, well, you have to have income to be able to put it in. But like, that’s, those are all good problems to have down the road. That’s just one of the things I frequently ask people when they’re talking about retirement is like, have you started a Roth IRA? And I think this is where it can get overwhelming for folks is like, well, what do I choose? I’ve got all these different options and just choose one, like just get started. Like whatever feels easiest for you.

Sometimes it’s easier for people to do it through their employer. They feel like it’s easier to do it for them through their employer. But Jenny, you and I were talking before we started about. We each have opened Roth IRAs in the past, and it’s just like pretty easy. You tell the story because I think you had some great examples.

Jenny

Yeah. So, I’ll say from my personal experience, I’m contributing Roth dollars through DCP. But then I also have a Roth IRA through, you know, one of these Robo-advisors. Then just for like the diversification conversation, I was like, well, I can have these three pots of money that I put a little bit into. So yeah, it’s kind of just nice to have.

We were talking about how easy it is. And so, one of the complaints about Roth IRAs is, oh, well, people say, “I just like to have the money come out of my paycheck, so I don’t have to have to worry about spending it or something.” And what I’ve done with my Roth IRA is just how it is with a savings account, or even like with my utility bill, I just have it set up on the I think it’s like the 10th of the month for that money to come out of my account and go into my Roth IRA account as well, so you can set up these things as automatic contributions and not have to worry about “how much am I going to put in this month?”

Malia

I think that’s such a great point, because that is in the, Pro column for employer sponsored plans, people are always like, “I can’t have the money touch my bank account. I need it to come out before it gets to my bank account to make sure I save it.” And that’s why a lot of people like, you know, the 457 plan. Right?

It’s works just like their pension where it comes out, you don’t even get a chance to touch it. But there’s also, like you said, a lot of great things that you can do. You know, technology has come so far with banks that you can automate that Roth contribution. Just like you said, I’ve seen people also kind of min max both where they’re like, “I want to pay as little in taxes as possible, so I’m going to contribute the maximum I can pretax for my paycheck.”

But maybe they’re one of the we’ve talked about, you know, those FIRE people where they, you know, are trying to save, what is it — Financially Independent Retire Early — and they’re saving every penny they can. So, they actually don’t need all that they’re getting from their paycheck. They will also then do that all the Roth. So then they’re getting that tax free growth, but then also saving on taxes at the same time at a higher limit.

So, I’ve seen people who, you know, kind of work out combinations of both. It’s just kind of everybody’s personal situation. But I like the idea because that, like I said, is a big sticking point for a lot of people when it comes to retirement savings, is they want it to be as automated as possible. So that’s, you know, a great example.

Seth

I think the other thing that people sometimes get intimidated by with the Roth IRA is that you then have to pick your own investments where your employer is providing you an investment lineup that you get to choose from. There’s usually a default investment, like a target date fund, and so there’s not as many decisions to make along the way.

When you’re signing up for a Roth IRA, you have to first pick who your provider is going to be. Mallia keeps mentioning Reddit. I did the same thing this morning. I was like, went on Reddit. Like, who should somebody choose for their Roth IRA provider? And you know, lots of recommendations and lists and there’s some consensus out there.

There’s certainly a handful or dozens of providers that are reputable and provide quality service. But then you also have to pick your investment and where the money is going to go. And some accounts require a minimum. You have to put in a certain dollar amount to get started. So there’s like different factors and things to consider. But I think another thing that somebody might consider a pro in that column is that you have a much wider variety of investments to choose from. And I know Malia always gets excited about that.

Malia

Yeah. One thing that I think is really interesting, I was actually talking to one of my friends the other day who kind of told me how with her Roth, because she’s had them with kind of the big three, and you know, who she prefers to have hers with. And, what I thought was really interesting was, you know, to your point, Seth.

So, she had mentioned there was one of them and I can’t remember who it was, but their entry fees were far less. If your balance is below a certain point, I want to add the caveat that the rollover you can’t roll your Roth IRA into the 457. That’s not allowed by the IRS, but you can roll your Roth IRA, amongst other Roth IRAs.

And so she started with kind of one of those lower fee ones. And then once her balance grew to a certain dollar amount, she rolled it over to one that actually had better fees for minimum balances. And so just because you pick one provider when it comes to your Roth IRA doesn’t mean that you’re stuck with them. You can roll it over.

Or, you know, when she got a little more investment savvy. To your point, Seth, and she was able to say, I’m going to go with this investment provider because they have the investments that I want and this one doesn’t and rolled it over. And so, yeah, and when it comes to the Roth IRAs, you can just roll them to the different providers.

Maybe you’re not stuck with them forever. So even if, you know, you took that Reddit advice and then it turned out to not work for you, you always have options to kind of send that, you know, put that somewhere else, and take advantage of whatever options that might be available with a different provider.

Jenny

And yeah, just as a reminder for our audience, just some of the three biggest providers out there like Schwab, Fidelity and Vanguard, I think. But there’s many, many, many others.

Malia

That’s exactly right. A lot of local credit unions may offer them or your bank might have their own. You know, I went online and I was looking at those three the other day, and it’s like ten minutes and you can open a Roth account nowadays. So, it’s very, you know, and they have questionnaires to your point set to help you, guide you into what might be a good investment choice for you.

And they also have target date funds now. So, they’ve got a lot of great options that are out there. I know it feels super overwhelming, but they’ve got a lot of good interfaces to help kind of just get the money in there. You know, don’t let analysis paralysis stop you. Just like with your Deferred Comp, it can feel really overwhelming.

But just start, get the habit, even if it’s just, you know, ten bucks that you’re putting in whatever it might be, just get in that habit, get it started, and then you can always move that around later.

Jenny

That’s great advice.

Malia

The other one question I just wanted to touch on, because we’ve been talking about different kinds of Roth accounts. People ask how come they can’t do Roth in their pension? When it comes to our Plan 3s, because there’s a defined contribution component. And I just want to clarify that that is not, there’s no Roth account in there.

And so, the pension you have to do that kind of pretax. We get people who say, why? Why can’t you add that feature? And it’s not available in the pension, but it is in the 457. So again, if you are somebody who wants a Roth and you’re sad that you can’t do that in your pension and you’re not taking advantage of the 457 or a Roth IRA, those are options for you.

But I just wanted to throw that out there because that was something that we did see a couple comments about. And the other question that we get a lot too, is people, Seth you touched on it earlier, that you can only put in what you make when it comes to our 457, we get people who are like, “I got an inheritance.

I just want to put that into my Deferred Comp.” And unfortunately, pro or con, it can only come from your paycheck when it’s going into our Deferred Compensation. Maybe if you got the inheritance, maybe that’s, you know, obviously you might be greater than the limit for the year, but that’s where a Roth IRA may be something that you could look at that’s with a private company.

And so again, just kind of how that money gets into each account is something that’s really good to think about as well.

Seth

I do just want to circle back to one thing we talked about as far as tax diversification and Malia to the point you’re just making about pensions, when you’re thinking about what income you’re going to receive in retirement as a public employee, your pension income is pretax income. I know the Social Security taxes can be complicated. So I think for some public employee retirees, a Roth account — whether it’s an IRA or through a 457 or a 403(b) if they work for a school district, some Roth savings — that helps give them that diversification.

Because everything else they already have lined up is going to be pretax income. And so giving them more flexibility. And that’s I think another reason a lot of public employees had been excited about seeing the Roth option within DCP was they didn’t necessarily have that option or as, as Malia was describing earlier, there are limits on how much money you can put in.

So especially if you start later in life, you haven’t had time for that Roth IRA to grow and build up a more significant balance. So once again, thinking about what your current tax situation is, but also thinking about what your retiree tax situation is going to be when you’re 65 or 73 and you start having to take RMDs.

Malia

Again, I just can’t drive home enough. I think a lot of people think of, as they should, their IRAs and the Deferred Comp as supplemental money outside of their pension. Their pensions, kind of like their bread and butter, what they always think about when they’re drawing money out. And again, thinking about what your drawdown strategy might look like is really going to help you make those decisions about Roth or pretax or what’s going to be best for you.

Again, like we said earlier, not just weighing the now, but the other end. Again, those forced RMDs, you know, I’ve seen some people have $80,000 RMDs in one year. That is a lot of money to unexpectedly have to take and pay taxes on that they didn’t think about, because all they were thinking about was their pension and growing the supplemental pot of money, and didn’t really have a lot of plans for it.

And the repercussions that can have on qualifying for whether it be certain benefits, Medicare, you know, maybe there’s housing income restrictions they have if they’re living in some kind of senior housing situation. And so again, thinking about what that drawdown strategy is, whereas with the Roth you don’t have those minimum distributions. And so, there’s a lot of options a lot out there for everyone.

Only you know what’s going to be best for you. And even then good luck predicting the future sometimes. But you know, just some things to think about when you’re making those considerations. Because that was resoundingly what we saw in the survey a lot was people mentioning that’s great to explain what Roth versus pretax is, but had I known that when I turned, you know, 65 or whatever age it was going to impact me in this way, maybe I would have done something different.

And one more thing I just want to touch on real fast too before we end our time here. Maybe you’ve been doing pretax this whole time and all you have is pretax. And you listen to this episode and you’re like wow that Roth sounds really nice and I wish I had done it. Within the 457, in the Deferred Comp, we do have in-plan Roth conversions. So, you can at any time take a lump sum of that pretax money, convert it to Roth. You will have to pay taxes on it and it is taxable income in the year that you do that. So, make sure you pay attention to those things and you think about it and you’re aware of all the repercussions.

But if all you’ve been doing is pretax and Roth sounds really good to you, it’s not too late, you still can do a conversion of that money whether you’re working or retired. That’s something that’s available within our plan. So I just wanted to put that out there, so nobody’s getting buyer’s remorse about not having Roth or something like that.

Jenny

Absolutely. And Voya makes it very easy for you to go into your DCP account and change those percentage contributions. So, it’s you just go in there and you say, oh, well, I’m doing, you know, a certain percentage towards pretax. And I want to now, you know, start switching to Roth. I’m going to do that or do a 50/50 split or a, you know, 60/40. They make it very easy.

Malia

They do. And another thing that I’ve seen a lot of people do, too, when it comes to Roth, and I know I myself did it when it was first available. I wasn’t sure what I wanted to do with my contributions if I wanted Pretax or Roth. And I just went in and I started a Roth contribution at the minimum, just to get that clock going, to make sure I met that five years.

And I’ve seen a lot of people do that, especially if they’re starting Roth later in life. They’re already over 59.5. Well, again, you have to meet both that criteria. It’s not enough to be 59.5 plus. You also have to have been doing Roth for at least five years. And so just getting that first contribution started, even if it’s a small amount, so you have that clock going, the Roth clock going, is another thing I’ve seen a lot of people do as well.

Seth

It is a complicated issue, and people in the private sector are having to make the same decision. When you if you start a job and it’s got a 401(k) option, it’s very likely it’s also got a Roth 401(k) option. And so it’s like these are decisions I think everybody is trying to figure out how to navigate. It can be challenging, but I think the best advice is you just start.

Malia

And you can reevaluate at any time. You’re not stuck. Like you said Jenny, it’s super easy to go in and change your contributions. I do it all myself where, you know, halfway through the year I’m like, you know, I don’t want to do that anymore. And you can just go in and change it and update it. It’s not something that you’re stuck with for life.

You can once a year say, do I still want to be doing this much in Roth? I want to do this much in pretax and make those changes based on, you know, whatever changes might have occurred in your life.

Jenny

Yeah. So just kind of as a general takeaway, you can contribute to a Roth account through your Deferred Compensation. Deferred Compensation is a 457. They offer pretax and Roth contributions. And DRS can’t offer an IRA because it does stand for Individual Retirement Account. But obviously there’s a lot of companies out there that do offer Roth IRA accounts, and you can do all three of those at the same time if you want to. Thank you, Malia. We really appreciate your insight, and hopefully this has given our listeners some food for thought.

Malia

Thank you for having me.

Jenny

Thanks.

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