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403b Transfer to Vanguard Wellesley
Old 12-15-2015, 09:31 AM   #1
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403b Transfer to Vanguard Wellesley

Good Morning All -

My wife is retiring and has a 403b plan that at the end of the year will be transferring to Transamerica. At this point we will not be making anymore contributions.

I thought this would be a good time to start consolidating our investments to Vanguard. We are looking at Vanguard Wellesley cause the asset allocation matches very well with our strategy.

Her current 403b has made distributions and will be transferring to Transamerica 31 Dec 15. Vanguard Wellesley of which we are interested has not yet made distributions.

My question is if I start the transfer now before Wellesley distribution am I making a big tax mistake. It will need a few days to make the transfer happen so if wait too long for the Wellesley distribution to happen the funds may end up going to Transamerica first and then to Wellesley. I know that if we buy into Wellesly before distribution we pick up the capital gains tax impact.

I am just a bit confused on tax implications. Capital gains, cost basis, ...

Appreciate your thoughts.

Thanks much.

kannon
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Old 12-15-2015, 09:43 AM   #2
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Quote:
Originally Posted by kannon View Post
My wife is retiring and has a 403b plan that at the end of the year will be transferring to Transamerica. At this point we will not be making anymore contributions.

Her current 403b has made distributions and will be transferring to Transamerica 31 Dec 15. Vanguard Wellesley of which we are interested has not yet made distributions.

I am just a bit confused on tax implications. Capital gains, cost basis, ...
There should be no tax implications in a 403b until you start taking distributions so as long as you just do a rollover of the full amount to a traditional IRA, there should be no issue. As for cost basis, your only cost basis as far as I know is any after tax contributions made to the 403b. Otherwise, it's all treated as ordinary income, as far as I'm aware.
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Old 12-15-2015, 10:01 AM   #3
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What happens inside the plan generally has no tax consequences. When you withdraw, that $ amount impacts your taxes.
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Old 12-15-2015, 10:08 AM   #4
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Thanks. Still learning here.

Understand now no tax implications and yes we are doing a full rollover to an tIRA, was just wondering in seven years when we start pulling out the funds would we have been better off waiting for after the distributions to move wife's 403b.

I thought when fund makes distributions in dividends/capital gains the mutual fund share price is impacted (i.e., reduced). So if we transfer today we could have less shares at a higher share price (impacts cost basis??) or if we wait could have more shares at a lower share price (lower cost basis??) but with dividends/capital gains to deal with eventually.

Maybe seven years from now it doesn't matter. This make any sense??
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Old 12-15-2015, 10:13 AM   #5
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Can't say what would be better in 7 years.

I would get the distributions, change to cash or similar. Then start transfer. I would know what I had before it arrived at Vanguard.
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