Rollover of 403(b) assets to a trad. IRA

[Guest Lyric]

I was informed on an investment BBS that I am entitled to rollover assets in my 403(B) plan to a traditional IRA by means of a custodian to custodian transfer (no distribution to me, hence no penalty).

I am just about to sign up with my new nonprofit employer's 403(B) plan (a variable annuity) which doesn't thrill me:

(1) Given that it will be a new 403(B) account set up through an insurance company as usual, at what point would I be able to rollover/transfer the assets to a traditional (new) IRA account to be held by a different custodian (a mutual fund family)?

(2) Which IRS provision specifically allows such transfers? (I may need to arm myself with chapter and verse if I meet any resistance.)

(3) My payroll deductions will of course happen monthly. But how often can I make such transfers from the 403(B) to the IRA? Once a month, once a quarter, once a year, once every ten years ...?

Any information or advice would be appreciated.

Lyric

[jlf]

Dear Lyric: Revenue Ruling 90-24 authorizes DIRECT TRANSFERS. Under the Ruling you may only transfer to another IRC section 403(B) investment. See 403(B)1, 403(B)7 and 403(B)9. No triggering event is required to effectuate a TRANSFER.

This differs from 403(B)8, the rollover provision, which authorizes ROLLOVERS to IRAs as well as TSAs. You must satisfy an early distribution triggering event under 403(B)(7)(A)(ii) and 403(b)11 in order to effecuate a ROLLOVER of elective deferrals.

Try to TRANSFER your current contributions quarterly to the TSA investment of your choice.

Insofar as you have separated from employment(a triggering event) you may effectuate a rollover of your former TSA to an IRA if that is what you want to do . Remember you may not borrow from an IRA but you can self direct the investments.Your personal circumstances should dictate your decision.

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[This message has been edited by jlf (edited 07-24-99).]

[This message has been edited by jlf (edited 07-24-99).]

[This message has been edited by jlf (edited 07-24-99).]

[Guest Paul McDonald]

If the only available option in your new plan is a variable annuity, you are most likely faced with contract charges (a.k.a. contingent deferred sales charges, rear-end load, back-end load, sales charges, etc.) if you transfer out of the contract in the first 5-10 years. These are contract charges and not IRS penalties. You may have a "free corridor" amount of say 10% each year that is not subject to the surrender charges. Check your prospectus closely as to availabiltiy for movement of funds to another TSA of your own choosing. Just because the IRS has rules for transfers and rollovers does not mean that the contract cannot have its own restrictions on the movement of money.

[Guest Lyric]

Thank you both. I shall check things out further -- especially the terms of the contract.

Lyric