What are the general rollover rules for a 403(b) account?


Quick Answer

Funds in 403(b) accounts may be rolled over to qualified retirement plans such as 403(a) annuities, other 403(b) plans, 401(k) plans, 457 plans or traditional IRAs without tax or penalty, according to the IRS. They can also be moved to a Roth IRA by paying taxes at transfer time.

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Full Answer

Hospitals, educational institutions and not-for-profit organizations offer retirement savings vehicles called 403(b) plans, explains Betterment. As with the more widely known 401(k) plans, employees deposit portions of their salaries to 403(b) plans in pre-tax dollars.

There are two main types of 403(b) rollovers to move money from a 403(b) to another retirement account, notes 403bWise. Direct rollovers transfer funds from one retirement account to another, while indirect rollovers transfer funds from the account to its owner to later deposit into a qualified account. In an indirect rollover, the account owner must deposit the funds to a qualified plan within 60 days of receipt or pay taxes on the rollover amount and a 10 percent penalty for an early distribution from the retirement plan. In addition, the company administering the original plan is required to withhold 20 percent of the balance for taxes in the event the funds are not deposited into a qualified account in time.

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