If you are no longer working with the employer that established your 403(b) account, you can roll your 403(b) balance into a traditional individual retirement account (IRA).

How It Works

Generally, only a signed contribution form is required by the individual retirement account (IRA) custodian/trustee to deposit the funds into an IRA. However, you should consult with your IRA custodian about their policies and procedures to 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 in 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 sent directly to them. If the funds are made payable to you, the 403(b) administrator is generally required to withhold at least 20% of the total amount for federal taxes.

Advisor Insight

Nickolas Strain, CFP®, AIF®
Halbert Hargrove Global Advisors, LLC, Long Beach, CA

It's true that you can rollover the funds from your 403(b) plan into an IRA, but there are 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 will depend on your work situation, your investment experience, the costs of various investment choices, and your goals for investing the funds.

Be sure to research how much it will cost to invest. The internal expense ratio of the funds can vary significantly. You may also consider keeping the funds in your 403(b) plan if you are between jobs and do not want to actively manage your investments. You can usually keep the funds in your existing account if your balance is greater than $5,000.