403b IRA Rollover Considerations

In general, 403b accounts have a relatively limited membership base.  If you’re lucky enough to be part of a nonprofit or if you were hired by an educational organization, you’ll be eligible to participate in this type of retirement account.  However, if you leave a 403b eligible position and want to take your savings with you, there are few things you need to consider before initiating a 403b rollover.

The first thing you should consider is whether or not you can rollover money to or from your 403b.  The general rule to keep in mind when it comes to any IRA rollover is that like can accept like – meaning that you’ll have little trouble rolling money from a old 403b into a new one.  As the funds in a 403b are typically tax-deferred, it’s also relatively little trouble to perform a 403b IRA rollover to any other type of tax-deferred IRA.  In addition, there have been some relatively recent additions to the tax code that allow you to perform a 403b rollover to a Roth IRA.  Always check with your friendly neighborhood financial professional about the specifics of 403b rollovers before initiating your transfer.

Generally speaking, you’ll want to rollover money from your 403b when it’s most advantageous for you and your long term investment goals.  These kinds of changes in a financial strategy usually come about after there’s been some change in your life.  A new job it is the most common reason to perform a 403b rollover, but it could be something as simple as growing older.  In any event, rolling over money is something that should never be taken lightly.

Let’s say you do have a new job and your new employer has a much better retirement account, with stronger management and an investment strategy that’s more in line with your retirement goals.  This is a perfect reason to do a 403b rollover.  On the other hand, let’s say you’ve grown older and your retirement date looms large.  You’re going to want to make changes to your investment strategy in order to minimize risk and ensure that your savings will still be around when you need them.  After all, at this point, the money invested is going to be in the accounts for a smaller time frame than when you first began your career.  You’ll want an investment account that reflects this reality.

Even if you aren’t starting a job or nearing retirement age, there are still several compelling reasons to perform a 403b IRA rollover on any funds you have sitting around from old employers.  Are your accounts earning the best possible rate of return?  If not, consider a privately held IRA, which typically offers many more investment options than employer-sponsored 403b accounts.  Or are you comfortable managing funds that are stored in many different accounts?  If not, a 403b rollover can be a great way to consolidate your retirement savings.

The main thing to consider is that 403b rollovers have to support your overall retirement investment strategy.  It is your money, after all, and it should be handled in the way that best serves both your intentions and your needs.  Keeping this in mind, along with a basic familiarity of the IRS rules regarding 403b rollovers, you’ll be able to play an active role in the management of each of your investments.

403b IRA Rollover Considerations
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Originally posted 2017-01-12 17:59:00.