Did you know CBB offers a Roth option?
In addition to contributing to your 403(b)(9) retirement plan with pre-tax contributions, Church Benefits Board (CBB) offers participants the opportunity to invest using Roth. Here is a quick summary of the pre-tax and Roth contributions:
Pre-tax Contributions
A pre-tax contribution is the most common option for CBB participants. You make this type of contribution on a pre-tax basis. You don’t pay taxes on the money you’re investing now. Instead, you will owe taxes on the disbursements you receive once you retire. However, ministers have the option of taking distributions as a tax-free housing allowance in retirement. Revenue Ruling 75-22 allows denominational pension boards such as CBB to designate a housing allowance for retired ministers receiving income. Retired ministers may ask CBB to designate all or a portion of their retirement income as housing.
Roth Contributions
On the other hand, you make Roth contributions on an after-tax basis. Since you’re paying taxes on the money you earn before investing it, you don’t have to pay taxes later when you withdraw the funds. Additionally, you don’t pay taxes on any earnings on your contributions (subject to certain withdrawal requirements). This is a good option for those who don’t want to worry about an additional tax burden during retirement or those who expect to be in a higher tax bracket after retirement.