![\"Bianca](\"http:\/\/blogs.nejm.org\/frontlines-clinical-medicine\/wp-content\/uploads\/sites\/8\/2016\/08\/AU000_bbelcher.jpg\")
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Bianca Belcher, MPH, PA-C, practices neurosurgery in Boston, MA.<\/p>\n
<\/p><\/div>Retirement contributions are often thought about late in the game. You\u2019re never too young to start contributing to \u201cyour future self\u201d but it is difficult to figure out where to start, which type of plan to use, and how much to contribute to your retirement at this stage of your life\/career.<\/p>\n
Here is a brief Q&A on the basics: What are a 401(k) and a 403(b)?<\/span><\/p>\n Depending on your choice of employment, chances are you will have the opportunity to participate in your company’s 401(k) or 403(b) plan. The \u201c401\u201d and \u201c403\u201d simply refer to the section of IRS tax code that they come from \u2013 401 is for private companies and 403 is for non-profit employers. These plans are designed so that you, the employee, can defer a portion of your salary prior to paying taxes<\/u> (tax deferred)\u00a0into these savings devices. Once you put money in a 401(k) or 403(b), your money will grow based on the investments that you select until you reach retirement age. What is a Roth IRA?<\/span><\/p>\n A newer savings vehicle is what is known as a ROTH IRA or a ROTH 401(k). As it relates to you, the employee, the biggest difference between a ROTH and a regular 401(k) or 403(b) is that ROTH contributions are made after taxes<\/u>, meaning that you will have already paid income tax on these contributions as you put them in. Naturally, that means that you do not have to pay income tax on those contributions when you take them out. In addition, withdrawals can be made before age 59.5, with the caveat that any growth made on those contributions must remain in the account until after that age. The downside of the ROTH option is that there are current limits placed on who can contribute to these accounts based on income levels. These levels change periodically, but at the time of this article, you can fully contribute to a ROTH IRA if you make $116,000 or less, with phased-out (limited) contributions allowed up to $131,000. After $131,000, you become ineligible to contribute to a ROTH. For married couples, you may fully contribute if you make less than $183,000 (household), making phased-out (limited) contributions up to $193,000. If you make more than those limits, you may not participate in a ROTH account.<\/p>\n
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<\/a>You may access the money in these accounts without penalty once you have reached the age of 59.5. Any money that you do take out of these accounts, presumably in retirement, will be taxed at your then individual tax rate. These plans currently (as of 2016) allow you to contribute up to $18,000\/year if you are under the age of 50. That limit tends to change periodically based on inflation, so be aware if it increases and you are able to put more into these accounts.<\/p>\n