If I am no longer employed, can I roll over a 403(b) plan into an IRA?
Rollover Steps to Take
Generally, only a signed contribution form is required by the IRA custodian/trustee to deposit the funds to your IRA. However, to be sure, consult with your IRA custodian regarding its policies and procedures. This will prevent any unnecessary delays.
You should also consult with your 403(b) plan administrator/carrier to ensure the proper paperwork is completed. You may need to complete a distribution request form in order to have the assets distributed. The administrator may also require an acceptance letter from your IRA custodian. This serves as a confirmation that the assets will be deposited to an eligible retirement plan.
Finally, make sure the transaction is processed as a direct rollover. This means that any funds distributed are made payable to your IRA custodian and are usually sent directly to them. If the funds mare made payable to you, the 403(b) administrator is generally required to withhold at least 20% for federal taxes.
To learn more, read our 403(b) plan tutorial.
Great question, 403b's share a lot of similarities with 401(k)'s. If you are no longer employed at the place you had the 403b then you should be able to roll it to an IRA, barring there aren't any unusual restrictions from the 403b plan. Check out this article I recently wrote, it goes into detail about rollovers and what the IRS does and does not allow you to do.
Please consider me a resource if you have any additional questions.
Yes. Now that you are no longer working with the employer you are able to rollover your 403(b) plan assets into an IRA.
One thing I would suggest is to contact your former employer and ask them what the procedure is, and which paperwork is required, for rolling over the 403(b) to your IRA.
Make sure you clearly state that the funds are being rolled over to an IRA, this way it is considered a trustee to trustee transfer. You will need to provide them with the IRA custodian name.
Yes you should be able to rollover you 403b to an IRA. Many 403b plans have their own paperwork to release the funds and roll them over to the IRA. Can be quite a hassle, but often worth it.
Yes, you can rollover the funds within your 403(b) plan into an IRA, but you have a few other options that you should think about as well. You can rollover the funds into another retirement plan, cash out your 403(b) plan, or keep the funds in the 403(b) plan.
The decision whether to rollover your funds to an IRA or to the other options will depend on your work situation, your investment experience, the costs of various investment choices, and your goals for investing the funds. Before moving your funds to another retirement plan or IRA, be sure to research how much it will cost to invest. The costs (internal expense ratio) of the funds can vary significantly. Also, be sure to ask if there are advisory or administration fees that will be applied to the account.
Rollover to an IRA
You can rollover the funds to an IRA without any tax consequences or penalties. Rolling over funds into an IRA will allow you to have many more investment options along with more flexibility over security/asset allocation within the account. The 403(b) plan most likely only had 10-15 funds to select from. Moving the funds to an IRA will give you many more options, depending on which custodian you select and the strategy you select. Once you have moved the funds to an IRA, you can start to take distributions from it after you reach age 59 ½. Again, before moving your funds to an IRA, be sure to research how much it will cost to invest in this account. Fund management fees vary significantly, and you may be charged account advisory fees as well.
Rollover into another retirement plan
If you plan to find another job in the near future, you can most likely rollover your 403(b) plan to your new company’s retirement plan if the new plan allows for it. The benefit of this option is to reduce the number of accounts you manage. As well, you may be more likely to monitor your investments in your current company’s retirement plan. The same advice about fees applies: Do your homework. Administration fees are a normal part of retirement plans, and it is important to know how much you are paying as a participant in the plan.
I sometimes get the question: Should I just cash out my balance? I’m including this option because it is available to you, but normally this is the last-resort option. If you took a full distribution of the funds and put the funds into your bank account, the distribution is fully taxable and a 10% penalty can be applied by the IRS if you are under 59 1/2. I would not recommend taking a full distribution even if the amount seems small to you and you are in your 30s or 40s. If you leave the funds in your 403(b) Plan, the funds will grow for your retirement. People are surprised how much even small amounts can grow in 20 to 30 years. I recommend that you keep the funds in a retirement plan or rollover IRA.
Keep the funds in the 403(b)
You may consider keeping the funds in your 403(b) plan if you are between jobs and don’t want to actively manage your investments. You are able to keep funds in a 403(b) plan (and not be forced to rollout the funds) if you have a balance of more than $5,000. If your balance is under $5,000, the plan administrator can rollover your balance to a Rollover IRA automatically. 403(b) practices vary depending on the size of the organization, but if you worked for a large organization, the 403(b) plan will typically have lower fees, which is a positive. In addition, you could benefit from an investment committee that reviews the investment options and will make changes if they determine that a fund should be replaced.
The short answer to your questions is YES.
As long as you are separated from service, you should be able to process a direct transfer from your former 403(b) to an Individual Retirement Account (IRA). As long as the rollover is processed as a direct transfer from your 403(b) to your IRA custodian, there should be no tax withheld. See - Rollovers of Retirement Plan and IRA Distributions - IRS.gov
It is worth mentioning that you may wish to check with your employer to determine if there are any penalties imposed for the transfer by the plan's investment sponsor. Some non-qualified 403(b) plans, particularly certain group annuity contracts established through insurance companies, impose a penalty on some or all of the distributions from the plan. Fortunately, these types of investment platforms are disappearing, but they are not entirely uncommon particularly among public school teachers and smaller non-profit organizations.