A pension changes the Roth 403(b) vs. traditional 403(b) choice, and Midflorida Credit Union usually tilts nurses' catch-up dollars toward Roth, because the pension already fills the lowest tax brackets in retirement. Most nurses assume they'll drop to a lower tax rate once they retire, but a pension that by itself covers the standard deduction means every 403(b) dollar you take out is taxed at your marginal rate from the first dollar. That matters because the split you set now repeats on every paycheck for 10 to 15 years, and it is hard to undo once the money has grown.
We wrote this for nurses and allied health workers with a hospital 403(b) or pension, and we follow one hypothetical sonographer through the calendar, from his first catch-up at 50 to his first pension 1099-R. Each stop gives the rule that applies at that age and what you should take from it if retirement is 10 to 15 years away.
By Hiroshi Tanaka, CFP — Retirement Planning Specialist | Reviewed by Robert Kim, AIFHiroshi builds retirement income plans using the bucket strategy, coordinating taxable, tax-deferred, and tax-free accounts.
If your pension covers the $16,100 standard deduction by itself, start your Roth catch-up this year, because the 5-year clock only starts with your first contribution.
CFP® and Lead Advisor, Midflorida Credit Union
Look at box 3 of your W-2. If Social Security wages passed $150,000, your catch-up goes Roth whether you like it or not.
CPA and Tax Director, Midflorida Credit Union
Age 50: the compounding years
Cedric (hypothetical) was 50 when he picked up extra shifts and sent his first catch-up, the extra amount people 50 and older can add, to the pre-tax side without thinking about it. A Roth dollar contributed 15 years before retirement gets 15 years to compound, and all of that growth comes out tax-free once you are 59½ and 5 tax years have passed. A traditional dollar saves the tax bill today, but the deferral and every dollar of its growth get taxed later at whatever rate applies then. The earlier the dollar goes in, the more the choice matters.
What age do the catch-up rules change your split?
For 2026, the IRS sets one $24,500 deferral limit that Roth and traditional 403(b) money share. At 50 and older you can add an $8,000 catch-up, for $32,500 in total, and at ages 60 to 63 the catch-up is $11,250 instead. The split is a percentage you set in your hospital payroll portal, not a separate account.
One recent change catches overtime-heavy nurses. Once your prior-year FICA wages from that hospital top $150,000, the plan has to put your catch-up on the Roth side. A charge nurse with heavy overtime can cross that line without noticing, so look at the Social Security wages box on last year's W-2.
Other changes affect roadmaps built before them. Roth 403(b) money no longer has lifetime required minimum distributions (RMDs). Traditional RMDs now start at 73, or at 75 if you were born in 1960 or later. And some plans now let the employer match go in as Roth, which is taxed as income in the year it is paid.
Cedric, under today's rules, would have qualified at 60 for the $11,250 catch-up. He kept all of it pre-tax. That is part of why his $750K is 100% traditional today.
The 2026 limits
Recent rule changes
| Age | Rule that switches on | Roth 403(b) side | Traditional 403(b) side |
|---|---|---|---|
| 50 | $8,000 catch-up ($32,500 total) | Allowed; required if FICA wages over $150,000 | Allowed under $150,000 prior-year FICA wages |
| 59½ | Penalty-free distributions | Tax-free once 5-year clock met | Taxed as ordinary income |
| 60–63 | $11,250 catch-up instead of $8,000 | Same Roth rule over $150,000 | Same limit |
| 65 | Medicare; IRMAA uses income 2 years back | Qualified payouts not counted | Payouts raise income counted |
| 73 or 75 | RMDs begin (75 if born 1960+) | No lifetime RMD | RMD required each year |
The last 5 working years and the timing traps
Starting late hurts first. The Roth 403(b) 5-year clock starts January 1 of the year of your first Roth contribution to that plan. A nurse who first switches to Roth at 62 and retires at 64 can't take the earnings tax-free until the clock runs out at 67.
The order of moves matters too. If you roll a Roth 403(b) into a Roth IRA, the Roth IRA's own 5-year clock applies, and the years in the 403(b) don't carry over. Opening a small Roth IRA years ahead starts that clock early, if your income allows it (the 2026 phase-out is $153,000 to $168,000 single, $242,000 to $252,000 joint). A 403(b) rollover is its own topic on this site.
Mind the calendar. Deferrals for a year must come out of that calendar year's paychecks, not by the April filing date. HR portals often need 1 to 2 pay cycles to apply a change, so a December change can miss the year entirely.
Going too early is the opposite error. Switching everything to Roth in a big overtime year, when your rate is at its peak, can mean paying a higher tax bill now than the money would ever face when you take it out.
Starting the 5-year clock late
Portal deadlines and overtime years
Deferrals for a tax year come only from that year's paychecks. Ask HR how many pay cycles a split change takes, and submit it at least 2 cycles before year-end.
How much does a pension tilt the Roth 403(b) vs traditional choice?
Compare the rate on your next working dollar with the rate on the next retirement dollar after your pension. When a pension alone covers your standard deduction, that retirement rate often lands close to today's rate, and Roth then wins ties because it carries no required distributions.
Cedric's January Form 1099-R shows his pension paid $2,500 monthly, $30K for the year (hypothetical, round numbers). That more than covers his $16,100 single standard deduction, even with the extra amount for people 65 and older. So every dollar he takes from his $750K traditional 403(b) is taxed at his marginal rate.
Now apply that to a $10K deferral at 2 working incomes, using assumed rates for illustration only. At 20% now and 20% later, traditional saves $2,000 now and costs $2,000 later: a wash, and Roth wins the tie because it has no RMDs. At 30% now and 20% later, traditional saves $3,000 and costs $2,000, so it comes out $1,000 ahead. The site's calculator runs this same arithmetic with your own numbers.
Sending every deferral pre-tax for 15 years showed up for Cedric the spring after he retired. His first 403(b) 1099-R landed on top of the pension. A $40K payout at an assumed 20% rate costs $8,000. If those deferrals went in at the same 20%, that is the same amount they saved him while he worked. All the pre-tax choice bought was a required distribution waiting at 73.
Cedric's lesson for a reader 10 to 15 years out is simple. When the 2 rates are within a few points, put at least the catch-up on the Roth side. Before changing anyone's split, Midflorida Credit Union writes both columns on one page so the nurse can show it to family. And the account can fall below what was contributed, whichever side the money sits on.
Cedric's 1099-R
Two incomes, one deferral
Decision rule: if your pension alone will cover your standard deduction in retirement, compare your rate today with the rate on the next dollar after the pension. Within a few points, put at least your catch-up on the Roth side.
| Rate now / later | Tax saved now | Tax paid later | Result |
|---|---|---|---|
| 15% / 20% | $1,500 | $2,000 | Roth ahead $500 |
| 20% / 20% | $2,000 | $2,000 | Wash; Roth wins tie |
| 30% / 20% | $3,000 | $2,000 | Traditional ahead $1,000 |
How long can Roth 403(b) money stay untouched for your family?
Roth 403(b) money has no lifetime required minimum distributions, so it can stay invested as long as you live. A traditional 403(b) forces distributions starting at 73, or at 75 if you were born in 1960 or later, as Cedric was.
A spouse who inherits a 403(b) can usually roll it in and treat it as theirs. Most adult children get 10 years to drain an inherited account. Traditional payouts are taxed at the children's own rates, often while they are earning the most they ever will, and qualified Roth payouts come out tax-free.
Cedric helps support a grandchild, and his heirs will inherit only pre-tax money unless he changes something. Conversions are covered on the site's Roth conversion page, so we leave them there.
Spouse and children
Where the pension rule of thumb breaks, and what can change later
Some nurses should lean Roth almost regardless of the pension math, such as a per diem or part-time nurse in a low-income year. Others should lean traditional: a nurse whose pension is small, or a cash-balance benefit she'll roll over, or one retiring years before the pension and Social Security start. She will have low-income years to draw pre-tax money cheaply.
Nobody knows tax rates 15 years ahead, so this comparison is an estimate. Congress can change rates in either direction. Large medical or long-term care costs late in life can make traditional payouts cheaper. And a married nurse who is widowed moves to single-filer rates on much the same income, which pushes the later rate up and favors Roth.
Keep some money on both sides. Then each year's retirement paycheck can come from whichever side has the lower tax bill. Some states tax retirement income, so check your own state's rules; this page doesn't work out state taxes.
Who leans which way
Leaving room for change
First moves for a nurse 10 to 15 years out
If this is you, with a pension coming and 10 to 15 years to go, take the steps in this order. First, get the pension estimate letter from HR and compare it with the standard deduction. Then check last year's W-2 Social Security wages against $150,000. Next, set the split in the payroll portal, for example base deferral traditional and catch-up Roth, at least 2 pay cycles before year-end. Last, write down the year of your first Roth contribution, so you know when the 5-year clock ends.
Your Roth split on a Midflorida Credit Union roadmap
Midflorida Credit Union advisors can put your pension estimate and both 403(b) sides on a one-page roadmap you can explain to your kids. The request form is the way to reach us, because we don't list a phone line. You get the fee for your case on paper before you agree to anything, and nothing here promises a result.
The earlier the dollar goes in, the more the choice matters.
Frequently asked questions about Roth 403(b) vs traditional
My hospital puts its match on the pre-tax side even though I chose Roth. Will I end up with both kinds of money?
Isn't paying the tax bill now just handing the IRS money years early?
What happens if I switch to Roth at 62 and retire at 64? Can I take that money tax-free?
I pick up extra overtime shifts some years. Should my Roth percentage change with my paycheck?
Will Roth 403(b) money push up my Medicare premiums later?
Sources and further reading
This article contains general information only and is not individual investment, tax or legal advice. Investing involves risk, including possible loss of principal. Before making any decision, consult a financial advisor, tax professional or attorney who knows your situation.