Roth 457 FAQ's

Is the Roth 457(b) the right direction for you?

The Roth 457 option was added to NDC on January 1, 2012. For some employees, it might make sense to pay taxes on NDC account contributions now, rather than when money is withdrawn at retirement. If you expect your income, the marginal tax rate, or both, will rise substantially over time, you may be taxed at a lower rate today than in the future – including in your retirement years. So the Roth option may be a good one – even if you are younger or currently in a relatively low tax bracket.

At the other end of the spectrum, the Roth option may appeal to current high-income earners who expect to continue to pay a high tax rate into retirement. This group may more easily afford to contribute the maximum annual contribution and pay the taxes today, in exchange for tax-free income in retirement – think of it as tax diversification.

Workers who expect to have relatively higher Plan account investment earnings or to otherwise end up with a higher amount of money set aside for retirement, may benefit from paying taxes up front or just having a pool of tax-free money to draw on. Such tax considerations can be complex; it’s always a good idea to consult with an independent tax advisor before making a decision on how Roth 457(b) savings may benefit your long-term savings.

What are designated Roth 457(b) contributions?

Designated Roth contributions are deducted from your paycheck on an after-tax basis, and therefore do not reduce gross taxable income.

Feature Traditional 457(b) Roth 457(b)
Payroll Deduction Yes Yes
Contributions Pre-tax dollars After-tax dollars
2026 Contribution Limits $24,500 ($32,500 if age 50-59 or 64+,
$35,750 if age 60-63, $49,000 for Special Catch-up)		 Same as Traditional but contributions are combined
Investment Growth  Accumulates tax-free  Accumulates tax-free 
Federal Tax on Distributions  Taxable income  Tax free if qualified

Can I contribute to both a pre-tax and Roth 457(b) after-tax basis at the same time?

Yes, but there are restrictions. Roth 457(b) contributions can either replace or complement your traditional pre-tax contributions, subject to IRS limits. In 2026, employees under age 50 can contribute a total of $24,500. For example, if you make $15,000 in pre-tax Plan account contributions, you can also make up to $9,500 in Roth 457(b) after-tax contributions. Employees who are age 50-59 or 64+ can add $8,000 more in pre-tax or Roth Catch-up contributions, for a combined total of $32,500. Employees who are age 60-63 may add $11,250 more in pre-tax or Roth Catch-up contributions, for a combined total of $35,750.

Can I make Catch-up contributions on a Roth after-tax basis?

Yes, as long as you don’t exceed the $8,000 for the 50-59 or 64+ catch up limit, $11,250 for 60-63 catch-up limit, or $24,500 for the special or three-year catch up provision in a calendar year as a combination of Roth and pre-tax savings.

How long do I have to contribute to get the Roth 457(b) benefit?

Roth contributions have a ‘five-year rule,” meaning you only get the tax benefits for Roth 457(b) if those savings are held in the Plan for at least five consecutive years. (See Distribution Question for more information)

Once contributions are made to a Roth 457(b), can they be shifted over to a pre-tax account?

No. You cannot move funds from Roth to pre-tax.

How long will I be able to make Roth 457(b) contributions?

You are allowed to make Roth 457(b) contributions to NDC as long as you remain an active employee with earned income.

Can I contribute to both the Roth 457(b) and the Roth IRA?

Yes, your ability to contribute to a Roth IRA does not change by participating in the Roth 457(b).

Does the Roth 457(b) restrict contributions if you earn a certain amount of annual income, similar to the Roth IRA?

No, the Roth 457(b) does not restrict higher wage earners from contributing. An employee can contribute the annual maximum to the Roth 457(b) regardless of their earned income.

Which fund options can I use to invest my Roth 457(b) contributions?

Roth 457(b) contributions can be invested in any of the investment options offered in the Plan.

Can I direct the investment of my Roth 457(b) contributions differently than my pre-tax contributions?

No. Your Plan account pre-tax and Roth 457(b) contributions have to be directed into the same investment option(s).

Will I have to set up a separate Roth 457(b) account under the Plan?

No. Think of Roth contributions as a separate post-tax contribution source within your NDC account. Before-tax contributions are held in one money source and Roth contributions will be another. Your money is held separately in each source, but all within the same account under the Plan.

Can I borrow from my Roth 457(b) account?

No.

Can I take a withdrawal from my Roth contribution account while I’m still working?

No. Roth sources are not available to employees who are still working.

Are Roth funds available for hardship withdrawal?

This option is currently undecided.

Will NDC allow participants to convert their existing pre-tax NDC to after-tax Roth?

Yes, this option is available. Please contact the NDC or Voya Financial office for assistance.

When can I take my monies from my Roth 457(b)?

Distributions from NDC for Roth funds are allowed under the following circumstances:

  • Separation of service and at least age 59 1/2 
  • Approved unforeseen emergency (may not be available for Roth)
  • At age 70½ , even while still working

How can I be assured I’ll receive a Roth 457(b) distribution tax-free?

Generally, you must be separated from service to receive a distribution. In order to ensure the distribution is tax-free, it must be a ‘qualified’ distribution. A qualified distribution must meet the following two conditions:

  • Roth contributions must be held in the account for five consecutive years after the first contribution is made; and
  • You must be at least age 59½ the year you take the distribution.

How are Roth 457(b) distributions taxed if they are not qualified?

If a distribution is not ‘qualified’, the portion of the distribution attributable to the Roth contributions, termed ‘basis’ by the IRS, is not taxable since it was taxed at the time it was contributed to the Plan. The earnings portion (if any) is taxable. The allocation between the basis and taxable earnings is determined on a pro-rata basis when distributed. For example, if a non-qualified distribution of $5,000 is made from your Roth account when the account consists of $9,400 of Roth contributions and $600 of earnings, the distribution consists of $4,700 Roth contributions and $300 of earnings.


Comparison of Selected Features of Roth 457(b) and Roth IRA

Feature Roth 457(b) Account Roth IRA 
2026 Contribution Limits $24,500 ($32,500 if age 50-59 or 64+; $35,750 if age 60-63; $49,000 if eligible for Special 457(b) Catch-up) $7,500 ($8,600 if age 50 or over
Roth Contributions After-tax dollars through convenient payroll deduction Same as Roth 457(b)
Investment Growth Accumulates tax-free Same as Roth 457(b)
Income Limitation in 2026 None No contribution if AGI is less than $153,000 (single) and $242,000 (joint).**
Loans Allowed No No
Distributions Available Anytime No, only at severance from employment, age 70 ½, unforeseeable emergency or de minimis amount. Yes
Basis Only Distributions No, pro-rata rule applies. Yes
Qualified Distribution Earnings are tax free Earnings are tax free
Qualified Distributions Defined Account held for at least five years and recipient is at least age 59½ and severed from service, dead or disabled. Same as Roth 457(b) except severance from employment rule does not apply.
Taxation of Earnings -Nonqualified Distribution Taxable, but not subject to 10% early withdrawal penalty if under age 59 ½. Taxable and 10% early withdrawal penalty may apply if under age 59 ½.
Required Minimum Distributions Not for the original owner during their lifetime. Not during owner’s lifetime, just beneficiary.
Rollovers In Yes from other designated Roth plan accounts, but not Roth IRA. Yes from Roth plan accounts and Roth IRAs

* There may be other differences between Roth 457(b) accounts and Roth IRAs. Each individual must determine which is best for their unique circumstances.

** Roth IRA Contribution Limits for 2026 – This table shows how Roth IRA contributions are affected by the amount of modified AGI as computed for Roth IRA purpose.

Filing Status  Modified AGI Contribution
Married filing jointly Less than $242,000 Up to limit.
  $242,000 but less than $252,000 Contribution reduced
  $252,000 or more Zero
Single, head of household Less than $153,000 Up to limit.
  $153,000 but less than $168,000 Contribution reduced
  $168,000 or more Zero