The amount of money you will need to live comfortably in retirement depends upon your future expenses and goals for retirement. In order to meet those goals, most people will need to save in addition to any employer and government benefits. Harvard provides several options that let you save additional money for retirement.
New for 2017: The Roth Option through the Harvard TDA Plan
With the new Roth option, your TDA contributions are taken out of your paycheck after taxes, investment gains accumulate tax-free and future withdrawals in retirement are not taxed.
Is the Roth option right for you? Depending upon your situation, Roth can help you manage your taxes in retirement by providing a source of income that is not taxed. View a comparison of some of the features of the Traditional and Roth contribution options. You can also learn more in the following resources:
- View a recorded presentation: Learn about Roth features, determining if the Roth option might be right for you, and how to enroll
- Roth contribution option for TDA brochure and Frequently Asked Questions
Tax-Deferred Account (TDA)
With two contribution options, TDA allows you to save for retirement and reduce your taxable income – now or in retirement. With the Traditional option, you make contributions before taxes, reducing your taxes today, and your savings aren’t taxed until you withdraw funds. With the Roth option (new in 2017), you make contributions after taxes, your savings grow tax-free and withdrawals in retirement are tax-free. You may choose either contribution option or divide your contributions between them.
You decide how much to save, up the plan limits ($18,000 for 2017, with higher limits for those age 50+), and where to invest from among Harvard’s menu of available, low-cost investment choices.
You can sign up for the TDA as soon as you start working and may change the amount of your contribution and your investment choice at any time. The money in your TDA is always yours.
New faculty and administrative/professional staff who make no election are automatically enrolled in the TDA Plan (Traditional option) after 60 days of employment, with an initial contribution rate or 3% of salary deducted from pay before taxes that increases by 1 point each January, up to 10% (not to exceed federal contribution limits).
Who it’s for:
Generally, if you are a University faculty or staff member, you are eligible to participate in the TDA Plan. New faculty and staff will receive information/enrollment package by mail.
To learn more, please review the TDA Information Sheet as well as the TDA Brochure (union staff) or the TDA Brochure - Auto-Enrollment (for faculty and nonunion staff). View a comparison of some of the features of the Traditional contribution option and the new Roth option contribution option and instructions on how to enroll in the Roth option via the HURC website.
457(b) Deferred Compensation Plan
Allows certain high-earning faculty and staff to set aside a tax-deferred portion of their salary, in addition to TDA deductions.
Who it’s for:
Employees whose base salary is at least $200,000 (for 2017) and reside in certain states are eligible to enroll in this plan. If you are eligible, you will receive enrollment information from the Harvard University Retirement Center (HURC).
To learn more, please review the 457(b) Information Sheet.