Make the most of pretax and Roth contributions  

Do you want to pay taxes on your savings today or in retirement?

If you have a retirement plan that offers both pretax and Roth after-tax contributions, you have two ways to save for retirement. Traditional contributions give you an income tax break right away. Roth contributions provide tax advantages later. Knowing the difference can help you make confident, informed decisions for your future. 

Pretax: Save on Taxes Today

Roth After-Tax: Save on Taxes Later

In retirement, pay income taxes on the money you invested―and on the earnings when distributed from the plan

In retirement, receive tax-free withdrawals of the money you invested―and the earnings*

Pay normal income taxes when you withdraw contributions and earnings
(You may have to pay a 10% penalty if you withdraw them before age 59 ½)

Pay taxes at your current rate at the time of contribution. You can withdraw earnings tax free as long as you have saved for at least five taxable years and you're at least age 59½; your distribution is made after your death; or you're disabled. Contributions are always distributed

Take home more pay today in exchange for paying taxes on your account when you retire

Take home less pay today in exchange for possibly paying no taxes on your account when you retire*

Lower your taxable income today, and pay taxes on your account when you retire

After-tax:  Don’t lower your taxable income today,  but have the opportunity for tax-free distributions in retirement*

*If you meet certain conditions.

The Roth after-tax option may be right for you if:

  • You expect your taxes to be higher in retirement. You may save by paying a lower tax rate on your savings today.
  • You have many years to build your savings. You’ll pay income taxes on what you contribute today, but you may not pay income taxes on the earnings*, which can add up over your working years.
  • You’re well-prepared for the future and would like to have both pretax and Roth after-tax savings to draw from in retirement.

Visit for more information about Roth contributions.

The pretax option may be right for you if:

  • You expect your income taxes to be lower in retirement. You may save by lowering your taxable income now and waiting to pay taxes on your savings until after you retire.
  • You aren’t well-prepared for retirement. Saving on a pretax basis allows you to save in your plan while enjoying current tax savings.

Consider diversifying

Not sure which type of contribution is right for you? Your plan may allow you to make both traditional and Roth contributions. Timing some of your tax savings now and some later could help you balance the effects of taxes, no matter what happens in the future.

You can take it with you

If you leave your employer you can roll your Roth account into another designated Roth account or a Roth Individual Retirement Account (Roth IRA).  You can roll your pretax account to an eligible retirement plan or IRA.

Note: Similar concepts about the timing of tax savings apply to Roth and traditional IRAs.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY and their applicable affiliates (collectively referred to as “Lincoln”). This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.