Non-profit organizations can now offer a Roth 403(b) to their 
employees, thanks to new rules that took effect in 2006. 
Contributions to a Roth 403(b) come from the after-tax earnings 
of plan participants. But, the main advantage of having a Roth 
account is that the funds in your Roth account grow tax free and 
remain tax-free at time of withdrawal, provided you meet certain 
requirements.

Your Roth 403(b) contribution can be up to $15,000 - the maximum 
elective salary deferral limit for 2006 or $20,000 for those 50 
and older.  Employees of eligible organizations - educational 
institution, hospital, home health service agency, health and 
welfare service agency, a church or church-controlled 
organization - may qualify to contribute up to an additional 
$3,000 over the general elective deferral limit under the 15-year 
catch up election. 

You may choose to split your 403(b) contribution between your 
traditional pre-tax account and the after-tax Roth account, as 
long as your combined total does not exceed the maximum salary 
deferral limit. Once your contributions are in the Roth 403(b) 
account, they cannot be re-characterized as pre-tax savings. 
Also, you can not convert traditional 403(b) assets into a Roth 
403(b), or transfer Roth IRA assets to your Roth 403(b) account. 

Because earnings generated in a Roth are generally not subject to 
income tax at distribution, the Roth 403(b) makes more sense for: 

1. Those who think that they may be in a higher tax rate in the 
   future.

2. Long term investors who do not want to take the chance of 
   having to pay tax on the appreciation from their account.

3. Executives who are ineligible to contribute to a Roth IRA 
   because of the income limits imposed on the Roth IRA. 
 

Daniel Lamaute
Lamaute Capital, http://www.InvestSafe.com is an investment 
brokerage firm that specializes in retirement plans.  The 
firm's clientele consist mostly of small businesses and 
nonprofit organizations.