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Can I move some money out of a 401k /403b into a retirement accnt that I'd manage?
Old 02-02-2014, 12:27 PM   #1
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Can I move some money out of a 401k /403b into a retirement accnt that I'd manage?

Hi:

I have a 403b (deferred compensation plan) with a former government employer. The funds within the 403b are not publicly traded. A couple of the funds perform really well and have a super low expense ratio. The other fund choices are not too great. The good choices are frozen, so I can't transfer money into them, only out.

For the situation described above, can I move the "cruddy" portion of the 403b out to an IRA account where I could make the choices as to which funds to invest in? Or, is it an all or none situation, I either have to leave all the money in the 403b or take all of the money out and transfer it to another retirement account?

I have a 401k with a current employer. I would like to know if I could transfer a portion of the vested amount that I have in that 401k account into another IRA retirement account where I could make my own investment choices?

Thanks for the advice.
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Old 02-02-2014, 12:40 PM   #2
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You need to look at the plan documents or call a service rep for them. Different plans have different rules so nobody here can give you a generic answer, but it shouldn't be too hard for you to do a bit of research to find out for yourself.

When I left my last employer there was some reason I wanted to keep some of my 401K investments there for a few more months (might have been a redemption fee for shares not held long enough) and I was able to do that. So you might be able to move out part of your 403b.

I'd be very surprised if you can move any of your 401k out of your current employer's plan.
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Old 02-02-2014, 12:48 PM   #3
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Thank you. I will check with the providers.
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Old 02-02-2014, 12:49 PM   #4
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My partner has a 401K through his employer that invests with Schwab. The predetermined funds in his account are all high expense ratio funds, but they have an option for self directed investments into a Schwab brokerage account. They don't make a point to advertise it, so we had to dig a bit to find it. But I was able to sell all of his funds and move them into two index funds with very low fees, very similar to the Vanguard index funds that many of us invest in.

I have to manually invest the funds each pay period for him, because the only choice for self directed funds is the money market, but once the funds show up in the money market I'm free to invest in any Schwab fund. It takes a bit more effort since the funds don't automatically get invested each pay period, but it's worth it to have better control over the investments.
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Old 02-02-2014, 01:04 PM   #5
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Most likely you can take the funds out of the old 403b since you are no longer employed there. But as suggested check the exact plan details. You can then do a rollover so you do not have tax liability, direct from 403b to IRA. Don't get a check sent to you for the amount you take out, it has to go around you so you never have real custody of that money in order to avoid the taxes.

On your current 401k, I also doubt you can take any out, but again the plan rules will state if you can. Same rules apply as above, do a direct rollover from 401k to IRA if you are able.

Having the IRA should give you a lot of options for investing the money, much more than the typical 401k/403b plan has available.
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Old 02-02-2014, 01:12 PM   #6
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Yes, I've rolled over a 403b to my IRA. It was a paperwork nightmare because the 403b plan admin made it as difficult as possible. Vanguard helped me do it.
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Old 02-02-2014, 01:46 PM   #7
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Quote:
Originally Posted by nico08 View Post
I have a 401k with a current employer. I would like to know if I could transfer a portion of the vested amount that I have in that 401k account into another IRA retirement account where I could make my own investment choices?
In many plans you can when you are over 59-1/2.
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Old 02-02-2014, 02:18 PM   #8
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Withdrawals from a 401k while you are still employed are referred to as In-Service Withdrawals.

Both DW and my 401k plans allowed this with a portion of our funds regardless of age. We had different employers in the same industry.

Bottom line is to either read your plan documentation or contact a service rep and inquire if In-Service Withdrawals are allowed at all, and if so what are the limits.

-gauss
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Old 02-02-2014, 06:46 PM   #9
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Hi:

I have a 401k with a current employer. I would like to know if I could transfer a portion of the vested amount that I have in that 401k account into another IRA retirement account where I could make my own investment choices?

Thanks for the advice.
We could do this where I worked. Only restrictions were that you could not get back in for six months. One of my coworkers did this a couple years before he retired.
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