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Roth vs Traditional Pre-tax Contributions
ROTH V. TRADITIONAL
Make after-tax contributions
Accumulate tax-free retirement money *
Taken out of your paycheck
Roth Contributions
ROTH V. TRADITIONAL
Lisa $40,000 Annual Income
6% Monthly Roth
Contribution
6% Monthly Traditional
Pre-tax Contribution
$200 Monthly Roth
Contribution*
$200 Monthly Traditional
Pre-tax Contribution*
$200 Monthly reduction
in take home pay*
$150 Monthly reduction
in take home pay*
How does
Roth affect your
paycheck?
* This hypothetical example is based solely on an assumed 25% income tax withholding rate. No other payroll deductions are taken into account. Actual taxes and take home pay will depend on your individual tax
situation. Pre-tax contributions and any related earnings will be taxed at the time of withdrawal. Any earnings on after-tax Roth contributions are income tax-free if certain conditions are met.
Bonds
Roth in workplace savings plan vs. Roth IRA
ROTH V. TRADITIONAL
2017 IRS Contribution Limits
Age 50+
$6,500
+$1,000
“Catch-up” amount (Age 50+)
Age 50+
$24,000
+$6,000
“Catch-up” amount (Age 50+)
Roth in plan
$18,000
Roth IRA
$5,500
Under Age 50 Under Age 50
2017 IRS Income Limits
Roth IRA
Single filers
$118,000
Phase-out starts;
ineligible at $133,000
Roth in plan
None
Roth IRA
Married filers
$186,000
Phase-out starts;
ineligible at $196,000
You may be able to roll the money in your Roth account in the plan to a Roth IRA account and avoid these required distributions – this option may most benefit those who want to leave this money to their heirs.
Benefits and Considerations
Are you eligible to
contribute to a Roth IRA?
How long is your
retirement horizon? What is your expected tax
bracket in retirement?
ROTH V. TRADITIONAL
Take your next step
ROTH V. TRADITIONAL
Talk with your tax advisor
Visit NetBenefits.com
Exploring the Benefits of an HSA
Reasons to Consider
an HSA-Eligible Health
Plan and HSA
HSA-Eligible Health
Plans and HSAs
Next Steps Using an HSA
AGENDA
What are HSA-eligible health plans and HSAs?
Pair together to make a unique and powerful combination
HSA-ELIGIBLE HEALTH PLAN AND HSA
• It's yours to keep even if you change
jobs or retire
• Helps you save and pay for medical
expenses
• Pays for qualified medical expenses
for you, your spouse, and eligible
dependents
HEALTH SAVINGS ACCOUNT (HSA)
• Similar to other health plans
• Pairs with a health savings
account (HSA)
• Generally lower health insurance
premiums
• Money saved on premiums can be
put into the HSA
HSA-ELIGIBLE HEALTH PLAN
How does it compare with other plans?
2With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. See your tax professional for more
information on the state tax implications of an HSA.
• Works with an HSA to help pay for
qualified medical expenses
• Generally lower health coverage
premiums
• Use HSA funds to pay out-of-pocket
medical costs tax free2
WHAT’S DIFFERENT?
• Comprehensive coverage
• No-cost preventive care
• Network of doctors
• Generally includes prescription
drug benefits
WHAT’S THE SAME?
HSA-ELIGIBLE HEALTH PLAN AND HSA
How it can work for you and your family
2With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. See your tax professional for more
information on the state tax implications of an HSA.
Tax-advantaged HSA
contribution for the
year:
$1,550 • $650 one-time employer
contribution
• $75 monthly employee
contribution
$4,200 • $1,200 one-time employer
contribution
• $250 monthly employee
contribution
$7,750 • $1,000 one-time employer
contribution
• ~$562 monthly employee contribution
(includes $1,000 catch-up)
Anticipated health care
costs for the year not
covered by the HSA-
eligible health plan:
$500 Doctor visits; relatively
healthy
$3,000 Doctor visits due to seasonal
illness; braces for daughter
$4,000 Doctor visits; monitoring supplies and
medicines to manage type 2 diabetes;
wife will need new eyeglasses
Savings carried over for
future use: $1,050 $1,200 $3,750
HSA-ELIGIBLE HEALTH PLAN AND HSA
Include out-of-pocket expenses such as:
Health plan deductible and coinsurance
Most medical care and services
Dental and vision care
Prescription drugs
Medicare premiums
Defined by the IRS
IRS Publication 502: Visit irs.gov/publications/p502 for a list of medical expenses that
generally qualify for payment or reimbursement.
Qualified medical expenses
HSA-ELIGIBLE HEALTH PLAN AND HSA
Reasons to consider an HSA-eligible health plan and HSA
REASONS TO CONSIDER
Benefits of the HSA-eligible
health plan and HSA
Generally lower
premiums
Money is
always yours
You’re
in control
HSAs let you save money
on taxes in 3 ways* Goes in tax-free
Grows tax-free
Use tax-free
*With respect to federal taxation only. Contributions, investment earnings, and
distributions may or may not be subject to state taxation. See your tax
professional for more information on the state tax implications of an HSA.
REASONS TO CONSIDER
Lawrence Livermore National Security provides
a $750 individual or $1,500 family contribution into your
HSA to help boost your savings.
Employer contribution to your HSA
REASONS TO CONSIDER
Using an HSA
USING AN HSA
How it works
Make pretax
contributions
Pay for qualified
medical expenses
Use for yourself,
spouse, eligible
dependents
Transfer from
another HSA
Contribute
How much should I contribute?
USING AN HSA
Consider contributing at least up to your deductible
Plan for out-of-pocket expenses
The total of all contributions cannot exceed IRS limits.
IRS Contribution Limits
USING AN HSA
*If age 55 or older, not enrolled in Medicare, and otherwise an eligible individual.
2018 Annual HSA Contribution Limits 2017 Annual HSA Contribution Limits
$6,750
Individual
$3,400 Family
Family
$1,000
Individual
$1,000
2017 Additional Catch-up Contribution*
$6,900
Individual
$3,450 Family
Family
$1,000
Individual
$1,000
2018 Additional Catch-up Contribution*
$260K
$220K
$180K
$155K
How much do you think a couple might spend on health
care costs throughout retirement?
USING AN HSA
$260K1
$220K
$180K
$155K
How much do you think a couple might spend on health
care costs throughout retirement?
USING AN HSA
1Please see corresponding footnote at the end of this workshop
For current qualified medical expenses
• Easy access
• Consider keeping some money in cash
For future qualified medical expenses
• Think about paying for current health
care expenses out of pocket
• Consider a long-term investing strategy
Considerations for investing in your HSA
USING AN HSA
HSA eligibility
USING AN HSA
NOT be enrolled
in Medicare
Have a valid
U.S. address
(no P.O. Box)
Be enrolled in an
HSA-eligible
health plan
NOT be covered
by another non-
HSA-eligible
health plan
NOT be
claimed as a
dependent
Next steps
Once your annual enrollment window opens
Open your HSA
Enroll in your employer’s HSA-eligible health plan
NEXT STEPS
Tips to make the most
of your health plan
Open an HSA
Shop around for
lower-cost “elective”
care services
Consider contributing
at least up to your
deductible
Note: Your HSA must be open in order to accept contributions,
including any from your employer.
NEXT STEPS
Investing involves risk, including risk of loss.
Information contained within this presentation is subject to change pending final regulations.
1 Estimate based on a hypothetical couple retiring in 2016, 65-years-old, with average life expectancies of 85 for a male and 87 for a female. Estimates are
calculated for “average” retirees, but may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity
Retiree Health Care Costs Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s
insurance program, Original Medicare. The calculation takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare
Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as
well as certain services excluded by Original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most
dental services and long-term care. Life expectancies based on research and analysis by Fidelity Investments Benefits Consulting group and data from the Society
of Actuaries, 2014.
2With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. See your tax professional
for more information on the state tax implications of an HSA.
*A distribution from a Roth 401(k) is federally tax free and penalty free, provided the five-year aging requirement has been satisfied and one of the following
conditions is met: age 59½, disability, or death. State taxes may apply.
The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity
does not provide legal or tax advice. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability,
accuracy, or completeness of such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
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