403(b) Rollover Options

If you're no longer working for the employer that set up your 403(b) plan, you can elect to roll your funds into a different account, such as an IRA or 401(k). The 403(b) rollover rules differ based on the type of account you choose to roll into.

Why Roll Over a 403(b)?

The main reason to roll over a 403(b) is to consolidate your accounts to make it easier to manage your retirement assets; you could roll over several employer-sponsored accounts into a single IRA , for example.

You, or your financial professional, will be able to view and track your investments in one place, which can help ensure your savings are allocated according to your time horizon and objectives.

Reducing your number of retirement accounts may also help you save on investment fees and overall costs associated with the plan. Consider consolidating to reduce the percentage of your savings that goes toward these expenses.

403(b) Rollover to IRA Rules

When you leave a job with a 403(b) plan, you have the option to roll over your 403(b) into an IRA. Provided this is done according to IRS guidelines, you won't pay any taxes. One advantage of an IRA account is that it often offers more investment options than 403(b) plans. Another plus is that with an IRA you can consolidate retirement funds and roll as many accounts as you like into one IRA.

You'll need to check with the provider of your 403(b) and the provider of the new IRA to see what forms you'll need to complete a rollover. For example, you may need to complete a distribution request form to have the assets distributed.

Roll Over a 403(b) into Another Employer Retirement Plan

If your new employer offers a retirement plan, such as a 403(b) or 401(k), you can roll over funds from your 403(b) plan into that plan as long as the plan rules allow for the rollover in both the outgoing and incoming plans. Consolidating your retirement accounts may make managing your overall financial picture simpler and more effective. You should have a financial professional review both plans to ensure this is suitable for your particular financial strategy. As with an IRA or 401(k) rollover, you won't pay taxes on the funds if the rollover process is done correctly.

Can a 403(b) Be Rolled Over to a Roth IRA?

If you have a 403(b), you can roll your money into a Roth IRA. However, because Roth contributions are made with after-tax dollars, this kind of rollover of pre-tax dollars is considered a "Roth conversion." That means you’ll have to report the money in your 403(b) as income and pay income tax on it during the tax year in which you make the rollover. Despite that tax liability, in some cases it may still make sense to do this kind of rollover. But it’s important that you consult a financial advisor and/or tax professional to determine if this is the right move for you.

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Contact us if you're looking to roll funds into a MissionSquare Retirement plan.

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