This calculator was designed to help you decide which type of contribution will provide you with more benefits in retirement: Roth or Traditional Pre-tax deposits. You can use it as a tool to assess different contribution strategies to maximize your retirement savings.

You just need to provide some basic information about your retirement plan. This includes your age of retirement as well as planned contributions to your retirement account. For accurate calculations, it is also important to have knowledge on the performance of your company’s investment plan selection, and marginal tax rates.

When this information is added to the 457 plan calculator you will be provided with detailed graphs, charts, and tables, outlining the potential value of your 457 plan account using roth or pre-tax deposits, according to your situation.

While both contributions can be equally effective, the best option for accumulating savings will rely on your personal means and circumstance. There are clear variances between the two contributions.

Often the best strategy to grow a 457 retirement plan account may be to use a combination of both contributions to their maximum benefit.

Traditional 457 pre-tax elections allow you to make contributions from your income before taxes. This can help lower current income taxes while allowing you to put more money towards your investment. In turn, you can earn more dividends during your highest earning years. Both your contributions and earnings will grow tax-deferred until you are ready to withdraw your investment. When the time comes for withdrawal, your investment will be considered ordinary income and will be taxed at the current marginal income tax rates.

On the other side of the spectrum, are Roth 457 contributions. With Roth, your contributions will be made after taxes, so there will be no tax deductions when you want to access your investment. Most plan participants make ROTH contributions when they expect to be paying the same amount of tax (or more) in retirement. However, there may be penalties if you choose to withdraw your investment or earnings prior to the account’s age of maturity.

So, which method will help you get the most out of your investment or earnings? Continue reading for more elaborate explanations on how use this calculator to get the answer you need.

There are various limits imposed on 457 plans from the annual contribution amounts to the age of withdrawal, along with various provisions to allow for increased savings.

• Currently, the yearly maximum contribution for a 457 plan as of 2018 is set at $18,500 and is not affected by the employer’s matching payment.


• If you're making pre-tax contributions, your earnings can be withdrawn before 59^1/2 unlike traditional 401k or 403b plans, which have a 10% early withdrawal penalty.


• In the case of Roth contributions, some penalties may apply if certain account maturities are not met. In order to access your ROTH investment without penalty, the savings must be held in the account for a minimum of five consecutive years.

The follow provisions set forth function as tools for individuals to increase savings even further:

• One provision exists that is for anyone not able to make a full yearly contribution, which allows the individual to catch up with their contributions within three years.


• There is another provision if you are over 50, which allows additional contributions of $6,000 to a 457 plan account raising the annual total to $24,500.


• Finally, there is alternative provision that allows greater contributions for ‘highly compensated’ employees, based on their employers overall 457 plan participation. In order to be classified as a ‘highly compensated’ and considered for this provision, your salary must be $120,000 or more. For eligibility, you should contact your employer to inquire whether such contribution limit is applicable for you or not.

It is worth noting that both annual maximums and catch up provisions are both indexed and adjusted for inflation, so these figures are always subject to change.

Its important to note that future rates of return are based on hypothetical scenarios, and can’t be predicted with certainty. Investments that have higher ROIs are subject to higher risk and volatility, and the actual rate of return can vary widely over time, especially for long-term investments. In some cases, there can even be a full or partial potential loss of principal on an investment.

By using our calculator you will be able to work out the best possible rate of return for your retirement savings. All you need are a few details that you should be able to work out easily or discover online or from your pension provider.

Age of retirement: It is assumed by the 457 plan that you will contribute to your pension account until the year before retirement. The final payment, therefore, will be at age 62, if you plan to retire at age 63. In this box, simply add your current age and the age that you hope to retire.

Annual contributions: There s a limit of $18,500 of contributions for the year 2018, however, you are able to make catch up payments to your Roth tax account if you are aged over 50. This means that the actual contributions could be improved to $24,500. Any payments made by the employer are not taken into account and do not affect the maximum contribution. It is worth noting that anyone on a high income may be affected by the upper limits on Roth contributions and that it is indexed to inflation. If you are unsure about this amount, your account administrator should be able to provide the exact figure.

You can also check the boxes that indicate if you wish to increase your contributions to the maximum in the future or to invest any taxation savings alongside your contributions.

Investments: If you invest your tax savings each year the total cash flow between the two account types can be balanced. Investment is an essential part of the Roth plan and will result in a more favorable outcome when compared to traditional pre-tax plans. This is because pre-tax elections reduce your taxable income at the end of the fiscal year and if you don’t reinvest these savings you are actually greatly over spending.

For instance, if you are making $75,000 you are subject to pay 15% on your taxes, equalling $11,250 in federal taxes for 2016. If you contribute $15,500 pre-tax to your 457 plan your taxable income reduces to $59,500, and the %15 tax bracket dictates that you will pay only $8,925. This creates a surplus of $2,325 for the year, which can then be directed to your Roth to reach your maximum contribution for the year. Therefore in this theoretical scenario the total investment into the 457 plan would be $15,500 pre-tax + $2,325 Roth to equal $17,825

Maximize Roth contributions: You should always contribute the maximum allowed by the federal tax authority into your Roth account. This means you are maximizing the potential tax savings. You can also take advantage of the additional allowances for catch-up for anyone aged over 50.

The next box is a drop down option that details the tax rates and investment returns you are able to expect.

Expected return rates:Your actual rate of return will depend on the way that your savings have been invested, but average earnings ranged from 7% to 10% over the last 40+ years. The best stability came from savings accounts in banks as this offers a safe investment, free from potential losses. However, do note that savings interest in banks is relatively low.

Tax rates:The current tax rate refers to the amount expected to be paid on taxable investments, while the retirement tax rate is the marginal amount expected to be paid at retirement.

The 403(b) savings calculator consists of two parts: an questionnaire and a results section. Within the information intake are two subsections outlining your employee savings plan and your employer’s contributions. For an accurate report to be generated the system will need some information about your income and the contributions you can make. We'll review this information together.

1. On the first line of the calculator, please indicate your annual salary and the percent of your annual salary to contribute to your plan (up to 20%) on the following line, using the arrow keys to make this selection easier.


2. On the third line of the calculator you may add your current age, followed by your age of retirement on the next line of the calculator.


3. Please add the current balance in your 403(b) account on the fifth line of the calculator.


4. If you will be receiving any yearly salary increases, you should include that in the sixth line of the calculator.


5. In the final line of this subsection you can indicate your annual investment fee, which is a designated percentage of your account balance. On average, investment costs can range from 1.4% on mutual funds up to 2.25% for variable annuities.


6. Verify the data by referencing the smart prompt to the right of the inputs and continue to the next subsection.


7. On the next line of this questionnaire you may identify what percentage of your contributions your employer will match, which can be up to 100%.


8. Then on the following line you may indicate if your organization has set a maximum limit for their contributions to your account on the next line of the calculator. This figure is expressed as a percentage of your annual salary and can be set up to 20%.


9. Verify the data by citing the smart prompt in the result window and if correct, check out your results!

The second part of this calculator offers a series of reports that detail the results of the questionnaire.

The first table is the After Tax Comparison. This shows the Roth 457 plan vs the Pre-tax 457 and how it will look across the life of the investment. Here you can see that the Roth does slightly better, the longer it is invested.

The second tab is the After Tax Total at Retirement. This shows the full value of each investment for a clear view of the amount you can expect at the end of the investment period. Once again the Roth appears to offer a better return.

The third tab is the Results Summary. This shows a breakdown of each plan detailing the total contributions, the total before taxes, the taxes at retirement and the value at retirement.

It is also possible to see a full Balances by Year breakdown on the final tab. This allows the investor to see the yearly increases and to determine the exact year that it is best for them to retire.