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403b Rollover
Old 02-24-2012, 10:55 AM   #1
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403b Rollover

Now that the market has come up a bit, I wondered if it would be possible to move my 403b (which is mostly mutual funds) into a fixed-rate annuity. I'm 58, but would like to take advantage of the increased value of my 403b, and secure it in a fixed rate investment in case the market drops before I retire in the next 6-12 months. I'd like to think the market will continue up, but between European monetary and mideast issues, etc. things could turn on a dime.

Can a rollover to an annuity be done before I turn 59-1/2? Is there some other investment vehicle beside an annuity that would secure the funds at a fixed-rate and still maintain the tax-deferred status of the present 403b funds? Thanks!

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Old 02-25-2012, 12:22 PM   #2
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I think a 1035 exchange would do what you want.

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Old 02-25-2012, 12:51 PM   #3
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Originally Posted by mjrsr0403 View Post
Is there some other investment vehicle beside an annuity that would secure the funds at a fixed-rate and still maintain the tax-deferred status of the present 403b funds? Thanks!
Does your 403b offer fixed investment choices such as short term bond funds, money market fund or other? When my DW was in a 403b (she's since RE'd and rolled over her savings to a rollover IRA), one of her choices was a "fixed" investment which paid a fixed rate of interest for a set period similar to a CD. Do you have a choice like that?

Your post seems to imply that you think all mutual funds are equity mutual funds. I'd be quite surprised if your 403b doesn't offer some fixed investment choices. I understand your interest in making your AA more conservative prior to retirement, but I'm surprised you feel you must abandon your 403b to do so.
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Old 02-25-2012, 12:58 PM   #4
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I think what you would do is to roll the 403b to an IRA. Then the IRA buys an annuity that makes payments to you and the payments are considered to be distributions from the IRA.

I think any distributions that you receive prior to turning 59.5 would be subject to penalty unless the structure of the annuity payments fell under the exclusion rules, but you will be so close you may be better off to just have the annuity payments begin after you turn 59.5.

That said, my personal view is that an annuity is a suboptimal solution in the long run compared to a conservative mix of low cost index equity and fixed income mutual funds, but I am comfortable with the risk.
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Old 02-25-2012, 07:59 PM   #5
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I'm not sure an annuity is a good move right now with interest rates being so low, but TIAA-CREF would be a good place to ask your question.

You could also change your AA inside your 403b. Most offer some sort of stable value fund or short term bond funds. tell us what funds you have access to in the 403b and we can suggest an AA.
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403b ira fixed annuity

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