rollover 403b plan without leaving current employer

[Guest tbellm]

Is this possible? My wife's plan offer limited number of funds. Does she have to leave the job to move this money somewhere more productive?

Thanks!

Tim

[mbozek]

If the plan permits, a participant can transfer the funds to another 403(B) contract or custodian under Rev Rul 90-24 without terminating employment. Transfers are also permitted after attainment of age 59 1/2. However, this may not be available if contract is non cashable.

[Guest STLGiant]

Many people confuse the term rollover with transfer. Here is a layman's definition of many (but not all) of the regulations.

Transfers generally occur when one seeks to improve performance within the host of fund vendors that are available within one product (like a variable annuity with sub-accounts) or between a group of vendors on the approved list.

Be aware that transfers may trigger a surrender charge penalty established by the vendor, which might penalize the participant for abandoning one vendor and selecting another. Generally, there are no surrender charges moving to and fro sub-accounts--except in and out of the "fixed" account.

There is also something called a direct transfer, between one district plan and another employer sponsored retirement plan, however, this is done at the vendor level. Keep in mind that the transfer would be at the discretion of the participant, and that surrender charges could also apply depending upon the type of investment.

A rollover is generally done between the vendor and the participant. A "triggering" event is needed for a rollover. Triggering events are generally death, disability, age 59 1/2 retirement, voluntary or involuntary termination of employment.

One can move take distribution of their 403(B) moneys in cash (ordinary income taxation applies within the year of distribution and pre-59 1/2 penalties may also apply as well). One can rollover the moneys into another 403(B), 401(k), 457 State Retirement plan, buy-back credits from a State Retirement plan (if your state has adopted EGTRRA). One can even take a penalty free 60-day loan of the retirement assets, so long as the moneys are redeposited into another individual or work retirement plan.

It should be noted that if the moneys are taken in cash, a 20% withholding applies, so you'll only get 80% of the account. Should you put the money back by 60-days, you'll need to come up with the 20% withholding in cash.

There is more, but then again you might seek to read the Distributions/Transfers/Rollover Message Board.

A rollover