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The Roth Option: Another Way to Save

Is the Roth Option Right for You?
Your specific financial situation and personal preferences will determine whether the Roth option is an appropriate choice. Take a look below for additional considerations.

Your workplace retirement plan makes it simple and convenient for you to plan for the future. Plus, you have two ways to invest: you can make traditional before-tax contributions or Roth after tax contributions.1 Both types of contributions offer compelling tax benefits — the key difference is how they are taxed.
 

The Roth Option Offers Alternative Tax Benefits.

Unlike traditional before-tax contributions, the Roth feature lets you save and invest with after-tax dollars. Because Roth contributions have already been taxed, your contributions and earnings can grow tax-free. And if certain requirements are met, you can withdraw the money without paying taxes in retirement.2


Effects on Taxes Now and Later.

Compare how the two types of contributions are taxed — when you make the contribution, over time, and when you start making withdrawals. 

table 1


 




Effect on Take-Home Pay.

Before-tax contributions reduce your taxable income, so you may end up with more take-home pay than with the same amount in Roth after-tax contributions.3

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Something to Think About.

Since qualified withdrawals from a Roth account are tax-free, your projected tax bracket inretirement could be an important factor.

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Keep in mind that the table above only offers general guidelines. There’s no way to predict future tax rates, and depending on where you are in your career cycle, your income in retirement could be higher than it is now.

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Consider consulting with a financial professional or tax advisor before making your decision.

 

 

1 Your plan may also allow non-Roth after-tax contributions. These follow different IRS guidelines.

2 A withdrawal is not subject to income tax if the Roth account has been in place for at least five tax years and the withdrawal is made after age 59½ or is due to disability or death. Distributions made before age 59½ may incur a 10% federal tax penalty, except for 457 plans.

3 Example is hypothetical and assumes a 15% withholding rate. Additional FICA and state taxes may apply.

Many tax planning strategies emphasize the deferral of current income taxes, on the basis that your federal income tax rate may be lower at retirement. Please keep in mind that federal income tax rates are unpredictable and may be higher when you take a distribution than at the time of deferral. Other factors, including state tax rates and your income, may also affect your overall tax rate upon distribution. Please consult with your tax advisor for individual tax planning strategy and advice. The Hartford does not predict or in any way guarantee favorable tax results.

This information is written in connection with the promotion or marketing of the matter(s)addressed in this material. This information cannot be used or relied upon for the purpose ofavoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.

Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the mutual funds or The Hartford’s group variable annuity products and funding agreements, and their underlying funds. For fund and product prospectuses and/or a disclosure document containing this and other information, contact your financial professional or visit our website. Read them carefully.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Life Insurance Company, Hartford Retirement Services, LLC ("HRS"), and Hartford Securities Distribution Company, Inc. ("HSD"). HSD (member FINRA and SIPC) is a registered broker/dealer affiliate of The Hartford.

Retirement programs can be funded by group fixed or variable annuity products and funding greements issued by Hartford Life Insurance Company (Simsbury, CT). Group variable contracts are underwritten and distributed by HSD, where applicable. HRS and HSD offer certain service programs for retirement plans through which a sponsor or administrator of a plan may also invest in mutual funds on behalf of plan participants.

NOT INSURED BY FDIC OR ANY FEDERAL GOVERNMENT AGENCY - MAY LOSE VALUE - NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

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