Roth or Pre-Tax? Making the 2025 457(b) Call When Overtime Kicks In

You are finishing a midnight overhaul. Bunkroom lights flick on as the crew laughs about tomorrow’s coffee run, and you glance at the latest stub: another big overtime block. Money is good, but the tax bite is real. Should those dollars land in a Roth 457(b) or a pre-tax 457(b) before the calendar flips?

This guide walks through the decision with 2025 numbers in plain firefighter English.

1. Why Overtime Can Push You Over the Line

For tax year 2025, the 24 percent federal bracket starts at about $103,350 for single filers and $206,700 for married couples filing jointly. IRS

A heavy callback month can nudge you from 22 percent into 24 percent. Deferring part of that income pre-tax can pull you back, trimming what the IRS takes today. But if you expect to land in the same or a higher bracket later—think pension plus Social Security plus side-gig cash—locking in a Roth now could win the long game. The choice is situational, not one-size-fits-all.

2. Roth vs. Pre-Tax at a Glance

	Roth 457(b)	Pre-Tax 457(b)
Taxes paid	Now, at your 2025 rate	Later, at your retirement rate
Take-home pay impact	Smaller today	Bigger today
Withdrawal taxes	Tax-free after 55	Ordinary income
Best for	Expecting higher future rates, need tax diversification	Expecting lower future rates, need cash flow relief

3. The 2025 Contribution Landscape

• Elective deferral limit: $23,500.

• Age-50 catch-up: $7,500 (total $31,000).

• SECURE 2.0 special catch-up (ages 60-63): $11,250 in place of the 50-plus catch-up. PLANADVISER Kiplinger

Most municipal plans let you split deferrals between Roth and pre-tax buckets, so you can hedge if you are on the fence.

4. Five-Point Decision Checklist

1. Pin Down Your Marginal Rate: Use the IRS Tax Withholding Estimator with current OT hours. Know if the next dollar lands at 22 percent, 24 percent, or higher.

2. Project Retirement Brackets: Add your pension, DROP payout, Social Security, and any rental or business income. If that pile keeps you in or above today’s bracket, lean Roth.

3. Watch the 2026 Sunset: Unless Congress acts, TCJA brackets expire after 2025. The old 25 percent bracket returns at lower income levels. That drift favors Roth for some.

4. Stress-Test Cash Flow: If only pre-tax deferrals let you cover mortgage, tuition, or daycare without new debt, choose pre-tax. Cash-flow safety beats theoretical tax math.

5. Blend When Uncertain: A 50-50 or 60-40 split buys flexibility. You can convert pre-tax dollars to Roth later if retired income ends up lower than planned.

   
   

5. Quick Math Example

• Gross OT bump: $10,000

• Marginal bracket without deferral: 24 percent

• Pre-tax deferral of $ 10,000: Tax saved today: $2,400

• Roth deferral of $ 10,000: Tax paid today: $ 2,400 Tax saved later: $? (depends on retirement bracket)

If you invest the $2,400 tax savings from the pre-tax route and your bracket drops to 12 percent in retirement, pre-tax could win. If future brackets rise or you sit at 24 percent again in retirement, Roth often pulls ahead.

6. Action Plan for This Pay Cycle

1. Run a Paycheck SimulationLog in to payroll. Model a $200\$200$200 per-check deferral change in both Roth and pre-tax flavors. Compare take-home impact.

2. Submit Changes Before July 1Many departments limit deferral updates to quarterly windows.

3. Open a “Bucket Two” Savings AccountAuto-transfer any OT above standard pay. From there, sweep into Roth or pre-tax 457(b) according to your bracket plan.

4. Calendar a January Re-CheckOvertime ebbs and flows. Revisit the mix each new year when you get your shift bid.

   
   

7. Age 60–63 Catch-Up: A Turbo Option

If you turn 60, 61, 62, or 63 in 2025, you can stuff an extra $11,250 into the plan for one to three years. That brings your total annual space to $34,750. You cannot stack this with the standard 50-plus catch-up, so pick the bigger number and run with it. Kiplinger

8. Bottom Line

Overtime dollars deserve a strategy. Pre-tax can cut today’s bill and free cash amid big life expenses. Roth can shield decades of growth from higher future rates. Most firefighters benefit from using both at different points in the career.

If you want eyes on your exact numbers, grab a quick slot with me or visit the Firefighter Hub for free tools and checklists:

• Hub: https://firefighters.carlsonplanning.co

• Calendly intro call: https://calendly.com/carlsonplanning/introduction-call-firefighters

Education only, not financial advice. Consult your own advisor or tax professional before acting on any strategy in this article.

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Carlson Planning Company (“CPC”) is a Registered Investment Adviser in the Commonwealth of Massachusetts. Registration as an investment adviser does not imply a certain level of skill or training.This material is for educational purposes only. It is not individualized investment, tax, or legal advice and should not be relied on to make decisions. All examples are hypothetical. Current IRS limits, tax rates, and laws may change without notice. Consult your own tax professional, attorney, or advisor before acting on any strategy discussed here. Investment products involve risk, including possible loss of principal. Past performance is not a guarantee of future results. Links to third-party sites are provided for convenience and do not constitute an endorsement.