Multiple 403(b) accounts

[Guest GPQuinn]

My wife just changed jobs, and stopped contributing to her old 403(B) account (although she remains at the old job part-time/per-diem).

The new full-time employer also offers a 403(B) plan.

Does she have to close the old account to open a new one, or can she have multiple 403(B)s (not contributing to one)?

Since she is still employed per-diem at the old place, is there a penalty for closing the account, even if she rolls the disbursement directly to the new account?

Can the disbursement/rollover happen at a later time, or does it have to coincide with opening the new account?

THANKS!

------------------

Gerard Quinn

[Carol V. Calhoun]

She's got a couple of options. One would be to leave the old contract in place and have only contributions under the new employer's plan go to the new contract. It is indeed legal to have multiple 403(B) contracts in this situation. Another would be to roll the money from the first contract to the second, if she would like to be able to consolidate all her 403(B) money in one place.

------------------

Employee benefits legal resource site

[Guest JWBrown]

If your wife closes out the first 403(B) account and rolls it to the other 403(B), there may be a surrender charge or something similar on the first 403(B) account, especially if the money is invested in annuities.

[Carol V. Calhoun]

I think you bring up a good point, JWBrown. Often, people get so worried about the tax consequences of plans that they forget about the economic consequences, which are far more important. In this situation, the tax law would permit either the transfer of the amounts or their retention in the existing contract. The participant's decision, however, will depend primarily on economic factors, such as surrender charges, relative rates of return of the contracts, length of time the participant anticipates holding the contract, etc.

------------------

Employee benefits legal resource site