Can a 403B Follow You to a New Employer?
If you work at a non-profit organization, you may have contributed to a 403b retirement plan during your tenure. However, after you change jobs, you may desire to move the money to your new employer. Knowing your options can help you make the best decision for your retirement funds.
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New Employer Account
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If your new employer has a plan for employees to participate in, the money in your 403b plan can move to the new plan if the plan permits it. The IRS rules allow plans to do so, but your new employer's plan may not. For example, if you new employer is a for-profit company, it might have a 401k plan that you can move the money into. If your new employer is another non-profit, you can move the money into that company's 403b plan.
Individual Retirement Accounts
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If your new employer does not offer a retirement plan, or you do not like the plan's options, you can move the money from your 403b plan into an individual retirement plan (IRA). The IRA can be at the same financial institution as your 403b plan or any other financial institution. You might move the money to an IRA if you want more control over your investment options or to consolidate all of your retirement funds into one place for easier record-keeping.
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Tax Effects
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Moving the money from a 403b plan to another tax-deferred qualified retirement plan does not result in any tax liability. Tax-deferred plans include 403b plans, 401k plans and traditional IRAs. The only way to generate tax liability would be if you moved the money into an after-tax plan, such as a Roth 401k, Roth 403b or Roth IRA. If you do so, you must include the money moved as taxable income for the year.
Methods
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You can move your money from a 403b plan to another qualified retirement plan, such as a 401k or IRA, through a transfer or a rollover. A transfer offers the simplest method: you designate the account to which you want the money moved, and your financial institution moves it straight into that account. A rollover pays the money to you and you have the responsibility of depositing it into your new account in no more than 60 days.
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