Get a tax advantage

Pre-tax or Roth after-tax contributions
You can choose to make pre-tax contributions, Roth contributions, or a combination of both. Withdrawals from pre-tax contributions will be taxed at your ordinary income tax rate. Withdrawals from Roth contributions aren’t taxed as long as they are taken after age 59½ and you have held the account for at least five years. Earlier withdrawals may be subject to income taxes and a 10% federal penalty tax.*

IRS contribution limits are based on your total contributions. For current IRS limits, visit vanguard.com/contributionlimits. If you are age 50 or older, or will reach age 50 by year’s end, and you contribute the maximum allowed, you may make catch-up contributions. Catch-up contributions allow you to save above the normal IRS annual limit on a pre-tax basis.

Use this tool to review some examples of potential tax savings you could realize by contributing to your plan.

Whenever you invest, there’s a chance you could lose the money.

*Taxes: Taking money from your retirement account can affect how much you’ll have to pay in taxes. You’ll owe taxes on pre-tax money. You won’t owe taxes on Roth earnings as long as you are age 59½ or older and it’s been at least five years since your first Roth contribution. If required by law, Vanguard will withhold some taxes for you. You may need to pay a 10% federal penalty tax if you take money out early.