Voluntary TSA Plan - After-tax Roth Contribution Option Now Available

The State System’s Voluntary Tax-Sheltered Annuity 403(b) plan (TSA) currently permits employees to make pre-tax salary deferrals which reduces their current taxable income. Contributions and investments earnings grow tax deferred and distributions are taxable.

Beginning April 1, 2025, employees may elect to make Roth after-tax salary deferrals to their Voluntary TSA.  Under a “designated Roth” option, investment earnings grow tax-free and a qualified distribution (taken after age 59 ½ and after at least five years following the first Roth contribution) are also tax-free.

The difference between a pre-tax payroll deduction and a Roth after-tax deduction is in the tax treatment of the payroll contributions now and how future distributions are taxed.  

How much can I contribute to the Voluntary TSA Plan?  Whether you choose to contribute on a pre-tax basis, after-tax Roth basis, or a combination of both, the annual limits as governed by the Internal Revenue Code apply.  Refer to the Voluntary Retirement Comparison for the 2025 contribution limits.

Is the Roth contribution option right for you?  It depends on your current and future tax situation.  While it’s difficult to predict what your future tax situation may be, you’ll want to estimate as best as you can, taking into consideration the best choice for your current tax circumstances and how those circumstances may change over time. You may want to consult with a tax advisor.

  • If you expect your tax rate in retirement to be higher than your current tax rate, you might prefer to choose an after-tax Roth contribution option; because you already paid taxes on Roth contributions, qualified distributions are tax free.
  • If you expect your tax rate in retirement to be lower than your current tax rate, you might prefer to choose a pre-tax contribution option; while this money is taxable, you can expect to benefit by being in a lower tax bracket in retirement.
  • If you expect your tax rate during retirement to be the same as your current tax rate, you might choose either or a combination of both pre-tax and after-tax Roth.

How can I start contributing to the Voluntary TSA Plan on an after-tax Roth basis?  To enroll or make changes to your current contribution election, log into Retirement@Work – enroll/change. 

Visit Tax-Sheltered Annuity (TSA) 403b for additional information about the State System’s Voluntary Tax-Sheltered Annuity 403(b) Plan.