The MillimanBenefits.com website asks me if I will make contributions pre-tax or Roth. What is the difference between a pre-tax contribution and Roth contributions?
The difference between these two contribution types is when your money is taxed: now or later. You postpone income taxes on all pre-tax money in your account, along with any investment earnings on your account-until you get a payout from the plan. If you choose to make Roth after-tax contributions, investment earnings on your Roth after-tax contributions can be distributed tax-free after age 59½, or if you die or become disabled, as long as your first Roth after-tax contributions have been in your account for at least five years. The first $16,500 that you save ($22,000 if you are age 50 or older) for 2009 may be before-tax, Roth after-tax or a combination of the two. Once a contribution has been made, you may not change the way that it was contributed. For future contributions, you may switch between the contribution types.
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