403(b) Rollover Questions

[steelcity]

Hello! I'm hoping this makes sense. My wife is retiring at age 56 as a teacher/administrator. Over time, she has accumulated 4 403(b) accounts worth about 750k. We'd like to roll them all into one Fidelity IRA. Does she have to retire BEFORE rolling the 3 inactive accounts, with the other staying active until June 30? Also, what is the community's advice on the best Fidelity fund(s) for her? Thanks for any advice!

 

[Marc]

If her 403(b) is already at Fidelity she might be getting lower fees than available commercially. If she has a non-traditional IRA (with after tax deposits) she might want to wait until emptying that IRA before creating a rollover IRA. Regardless, no issues rolling over; just need to make sure it is direct so that taxes aren't withheld.

Caveat; I was 60 when I transferred my 403(b)s to Rollover IRA.

 

[38Chevy454]

I assume the 3 inactive accounts are from previous employers? If so then yes, you can do a rollover to self directed Fidelity IRA now. Even if they are held at different brokerage administrators. You can go into a Fidelity office and they will have someone that can assist to make it easy and painless. You can probably even get some bonus cash from Fidelilty by opening the new account and transferring the inactive accounts. Call Fidelity and ask them, plus they can help start the process over the phone. The current employer 403b will have to wait until your wife retires. But can then be rolled over and added to the Fidelity IRA.

As for fund suggestions, that depends on your intended usage for the money, your risk tolerance, timeframe, and other questions. But the simple answer is use low cost diversified funds. Which funds and what type investments are based on the questions. Fidelity has a lot of good low fee options to choose from.

 

[Lewis Clark]

She probably won't be allowed to move the funds in the 403(b) account from the current employer as long as she is currently employed. After she is off the books as an employee she should be free to transfer the funds to an IRA.

Funds in the inactive accounts from past employers should be movable right now.

Some accounts may require getting the past employer to certify she is no longer employed, so don't be surprised if that happens. This was the case for all of my different 403(b) accounts.

 

[steelcity]

Thanks for the replies. Retirement is only 4 months away. I guess I'll be patient!

 

[Out-to-Lunch]

Note that she likely can access the 403(b) at her current employer if she leaves it alone. However, if she moves it into an IRA, she will need to wait until she is 59.5 to get it out without any penalties.

If it were mine, I would roll the other 3 403(b)'s into an IRA, but keep the current employer 403(b) as it is.

 

[HI Bill]

Note that she likely can access the 403(b) at her current employer if she leaves it alone. However, if she moves it into an IRA, she will need to wait until she is 59.5 to get it out without any penalties.

If it were mine, I would roll the other 3 403(b)'s into an IRA, but keep the current employer 403(b) as it is.

+1. I believe you're referring to the "Rule of 55", which I was just going to add: "Under the terms of this rule, you can withdraw funds from your current job's 401(k) or 403(b) plan with no 10% tax penalty if you leave that job in or after the year you turn 55." But you should talk to your plan administrator to determine whether Rule of 55 withdrawals can be partial, and what the terms are. This is potentially a major reason not to move your wife's existing 403(b) account to an IRA. For tax planning purposes, it may be helpful to use this account first, before the RMD age, to help reduce overall taxes later.

 

[target2019]

We're starting to get information on transferring a 403(b) from Equitable.

Note that many web searches on the subject of 403(b) transfer and access have links to https://403bwise.org/ .

Their motto is "The K-12 403(b) is broken. Together we can fix it." Lots of good information there if you're interested.