2025 Fee Showdown: Rolling Over a 403(b) vs. Leaving It Where It Is
Introduction
When you leave your job, your 403(b) doesn't have to stay behind. The decision to roll over or leave your retirement account with your former employer can cost—or save—you tens of thousands of dollars over the next two decades. (Pew Trusts)
Fresh 2025 benchmarks from industry leaders reveal the true "fee drag" of employer-sponsored 403(b) plans. The average all-in fees for major provider plans now average 0.71%, with per-capita administration fees averaging $309.63 annually. (Beagle) Meanwhile, low-cost IRA options can slash these expenses to as little as 0.03-0.20% annually.
The math is stark: a seemingly modest 0.50% annualized asset fee plus $25 quarterly participant charge can compound into tens of thousands of dollars in lost returns over a 30-year career. (Beagle) Even more concerning, a 1% difference in annual fees can reduce your retirement balance by 20-25% over 30 years due to the power of compound interest. (Beagle)
This comprehensive analysis examines real-world scenarios, provides actionable fee comparison tools, and helps you make an informed decision about your 403(b) future.
The Hidden Cost of Staying Put: 2025 Fee Landscape
Current 403(b) Fee Structure Reality
Employer-sponsored 403(b) plans carry multiple fee layers that many participants never fully understand. These typically include:
• Investment management fees: 0.40-1.20% annually
• Administrative fees: $200-500 per participant per year
• Record-keeping fees: Often embedded in expense ratios
• Transaction fees: $25-75 per trade or rebalancing
• Loan origination fees: $50-100 plus ongoing maintenance
Compound interest is a powerful feature of investing, but the same forces apply to retirement plan fees, which can hinder investment growth and result in significant forgone earnings. (Pew Trusts)
The IRA Alternative: Low-Cost Freedom
Modern IRA providers offer dramatically different fee structures:
• Robo-advisory fees: 0.25-0.50% annually (all-inclusive)
• Index fund expense ratios: 0.03-0.20% annually
• Account maintenance: Often $0 with minimum balances
• Trading fees: $0 for most ETFs and mutual funds
• Rebalancing: Automated at no additional cost
Services like Beagle Financial Services specialize in helping individuals transition from high-fee employer plans to optimized IRA structures. (Beagle) The platform offers hassle-free rollover services that can potentially save users thousands of dollars by eliminating fee drag. (Beagle)
Case Study Analysis: The 20-Year Impact
Case Study 1: Sarah the Teacher ($100,000 Balance)
Scenario: Sarah, a 45-year-old teacher, leaves her school district with $100,000 in her 403(b). She's deciding between leaving it with her former employer's plan or rolling it to a low-cost IRA.
Option A: Stay in 403(b)
• Annual fees: 0.85% + $350 administrative fee
• Investment options: Limited to 12 high-cost mutual funds
• Average expense ratio: 0.95%
• Total annual cost: $1,200 (1.20% of balance)
Option B: Roll to Low-Cost IRA
• Robo-advisory fee: 0.25%
• Average ETF expense ratio: 0.08%
• Total annual cost: $330 (0.33% of balance)
• Annual savings: $870
20-Year Projection (assuming 7% gross returns):
• 403(b) final balance: $324,000
• IRA final balance: $361,000
• Difference: $37,000 in Sarah's favor
By mid-career, the typical American has three or more 401(k)s, and many lose track of at least one of them. (Beagle) Sarah's proactive approach to consolidation and fee optimization pays substantial dividends.
Case Study 2: Marcus the Hospital Tech ($80,000 Balance)
Scenario: Marcus, a 38-year-old hospital technician, has $80,000 in his 403(b) and is considering his options after accepting a position at a different healthcare system.
Option A: Stay in 403(b)
• Annual fees: 0.75% + $275 administrative fee
• Limited investment menu with high-cost options
• Average expense ratio: 1.10%
• Total annual cost: $1,155 (1.44% of balance)
Option B: Roll to Low-Cost IRA
• Robo-advisory fee: 0.30%
• Average index fund expense ratio: 0.05%
• Total annual cost: $280 (0.35% of balance)
• Annual savings: $875
20-Year Projection (assuming 7% gross returns):
• 403(b) final balance: $245,000
• IRA final balance: $284,000
• Difference: $39,000 in Marcus's favor
Both Beagle Financial and similar services aim to eliminate 'orphaned' retirement money that gets stranded when you leave an employer. (Beagle) Marcus's situation demonstrates how fee optimization becomes even more critical for younger savers with longer time horizons.
Fee Comparison Checklist: Your Action Plan
Step 1: Decode Your Form 404a-5
Every 403(b) participant receives an annual fee disclosure (Form 404a-5). Here's how to extract the critical data:
Administrative Fees Section:
• Look for "Plan Administration" or "Record Keeping" fees
• Note both percentage-based and flat dollar amounts
• Check for "Per Participant" charges (often $200-500 annually)
Investment Fees Section:
• Find the "Total Annual Operating Expenses" for each fund
• Calculate your weighted average based on your current allocation
• Add any "Wrap Fees" or "Platform Fees" listed separately
Transaction Fees:
• Document loan origination and maintenance fees
• Note any trading or rebalancing charges
• Check for early withdrawal or hardship distribution fees
Step 2: Research IRA Alternatives
Compare your current costs against modern IRA options:
Robo-Advisors:
• Betterment: 0.25% annually (no minimum)
• Wealthfront: 0.25% annually ($500 minimum)
• Vanguard Digital Advisor: 0.20% annually ($3,000 minimum)
Self-Directed Options:
• Fidelity: $0 account fees, 0.015% average expense ratios
• Schwab: $0 account fees, 0.03% average expense ratios
• Vanguard: $0 account fees (with e-delivery), 0.04% average expense ratios
Full-Service Options:
• Beagle Invest offers robo-advisory portfolios as part of their comprehensive retirement account management platform (Beagle)
• Traditional brokerages: 0.50-1.50% annually for managed accounts
Step 3: Calculate Your Potential Savings
Use this formula to project your 20-year savings:
Annual Fee Difference = (Current 403b Total Fees) - (Proposed IRA Total Fees)
20-Year Savings = Annual Fee Difference × 32.5 (compound factor at 7% returns)
Example Calculation:
• Current 403(b) fees: 1.20% of $100,000 = $1,200
• Proposed IRA fees: 0.35% of $100,000 = $350
• Annual difference: $850
• 20-year projected savings: $850 × 32.5 = $27,625
Step 4: Consider Non-Fee Factors
Advantages of Staying in 403(b):
• Potential for employer matching (if still employed)
• Loan options (though often expensive)
• Creditor protection in some states
• Familiar investment options
Advantages of IRA Rollover:
• Unlimited investment universe
• Lower fees and expenses
• Better online tools and mobile apps
• Consolidation of multiple accounts
• More flexible withdrawal options
The Rollover Process: Making the Switch
Direct vs. Indirect Rollovers
Direct Rollover (Recommended):
• Funds transfer directly between custodians
• No tax withholding or penalties
• No 60-day deadline pressure
• Eliminates risk of accidental taxable distribution
Indirect Rollover (Higher Risk):
• Check issued to you personally
• 20% automatic tax withholding
• Must deposit full amount (including withheld taxes) within 60 days
• Risk of permanent tax consequences if deadline missed
Beagle Financial Services specializes in 401(k) detective work, using technology to search Form 5500 filings, the National Registry of Unclaimed Retirement Benefits, and other databases. (Beagle) Their comprehensive approach also handles the rollover process if you want to consolidate your old accounts for easier management. (Finder)
Timeline and Documentation
Week 1-2: Research and Decision
• Gather fee documentation from current 403(b)
• Research IRA providers and fee structures
• Calculate potential savings using the checklist above
Week 3-4: Initiate Process
• Open new IRA account
• Complete rollover paperwork
• Coordinate with both old and new custodians
Week 5-8: Transfer and Verification
• Monitor transfer progress
• Verify all funds arrived correctly
• Confirm investment allocations match your strategy
Advanced Considerations for 2025
Tax Implications and Timing
Rolling to a traditional IRA creates the option for strategic Roth conversions during low-income years. This can be particularly valuable for:
• Career gaps or sabbaticals
• Early retirement phases
• Years with significant tax deductions
IRAs offer more flexibility in RMD timing and beneficiary designations compared to employer plans. This becomes critical for:
• Estate planning optimization
• Multi-generational wealth transfer
• Charitable giving strategies
Investment Strategy Evolution
Low-cost IRAs provide access to:
• International diversification through global index funds
• Factor-based investing (value, momentum, quality)
• ESG and socially responsible investment options
• Alternative investments (REITs, commodities, emerging markets)
Modern IRA platforms offer sophisticated rebalancing algorithms that:
• Maintain target allocations automatically
• Harvest tax losses in taxable accounts
• Optimize asset location across account types
• Adjust risk profiles based on age and goals
Technology and Service Advantages
Digital Account Management
Beagle is a comprehensive 401(k) search service that helps individuals find all their old retirement accounts they may have lost or forgotten. (Finder) Beyond account discovery, modern IRA platforms provide:
• Unified Dashboards: View all retirement accounts in one interface
• Real-time Performance Tracking: Monitor returns, fees, and allocation drift
• Goal-based Planning: Project retirement readiness and adjust strategies
• Mobile Optimization: Full account access and management via smartphone
Concierge Services
Beagle charges a membership fee and provides hidden-fee analysis, 0% net-interest loans, and robo-advisory portfolios. (Beagle) Their core membership, priced around $3.99 per month, covers account discovery, fee reports, and concierge phone calls to plan administrators.
Service Comparison:
Service Type403(b) ProviderModern IRA PlatformPhone SupportBusiness hours onlyExtended hours + chatOnline ToolsBasic statementsInteractive planningFee TransparencyAnnual disclosureReal-time trackingInvestment ResearchLimitedComprehensiveAccount ConsolidationNot availableSpecialized service
Making Your Decision: The 2025 Framework
When to Stay in Your 403(b)
Consider staying if:
• Your plan offers institutional-class funds with expense ratios below 0.20%
• Administrative fees are minimal (under $100 annually)
• You value the simplicity of leaving things unchanged
• Your plan offers unique investment options (stable value funds, company stock)
• You're planning to return to the same employer system
When to Roll Over to an IRA
Roll over if:
• Total annual fees exceed 0.75% of your balance
• You want access to a broader investment universe
• You have multiple old retirement accounts to consolidate
• You value advanced digital tools and mobile access
• You're planning strategic Roth conversions
• You want professional management at a reasonable cost
The Hybrid Approach
Some savers benefit from a partial rollover strategy:
• Keep a portion in the 403(b) for specific investment options
• Roll the majority to a low-cost IRA for fee savings
• Maintain flexibility for future employment changes
Implementation Strategy for 2025
Month 1: Assessment and Planning
Week 1-2: Fee Analysis
• Request detailed fee breakdown from current 403(b) provider
• Use the checklist above to calculate total annual costs
• Research 3-5 IRA providers for comparison
Week 3-4: Provider Selection
• Compare fee structures, investment options, and service levels
• Consider factors like account minimums and platform usability
• Read recent reviews and regulatory disclosures
Month 2: Execution and Transfer
Week 1: Account Opening
• Open new IRA account with chosen provider
• Complete all required documentation and identity verification
• Set up online access and mobile apps
Week 2-4: Rollover Process
• Initiate direct rollover from 403(b) to IRA
• Monitor transfer progress and communicate with both custodians
• Verify all funds transfer correctly and investment elections are proper
Month 3: Optimization and Monitoring
Week 1-2: Portfolio Setup
• Implement target asset allocation
• Set up automatic rebalancing if available
• Configure performance tracking and alerts
Week 3-4: Ongoing Management
• Review quarterly statements for fee accuracy
• Monitor investment performance against benchmarks
• Adjust strategy based on life changes or market conditions
The Bottom Line: Your 403(b) Decision
The choice between rolling over your 403(b) or leaving it with your former employer ultimately comes down to fees, investment options, and service quality. The case studies above demonstrate that fee differences of just 0.75-1.00% annually can cost tens of thousands of dollars over two decades.
For most savers, the math strongly favors rolling to a low-cost IRA. The combination of lower fees, better investment options, and superior digital tools creates a compelling value proposition. Services like Beagle Financial Services have emerged to simplify this transition, offering comprehensive account discovery, fee analysis, and rollover assistance. (Beagle)
However, the decision isn't purely financial. Consider your comfort level with managing investments, your need for ongoing advice, and your long-term retirement strategy. Some high-quality 403(b) plans with institutional pricing may justify staying put, while others with excessive fees and limited options make rolling over an obvious choice.
The key is to make an informed decision based on actual data rather than inertia. Use the fee comparison checklist, run the 20-year projections, and choose the path that maximizes your retirement security. Your future self will thank you for taking action today.
Remember: compound interest works both ways. Just as your investments can compound over time, so can the fees you pay. (Pew Trusts) Make sure compound growth is working for you, not against you, by optimizing your retirement account fees in 2025.
Frequently Asked Questions
What are the typical fees for keeping a 403(b) with a former employer in 2025?
Based on 2025 benchmarks, the average all-in fees for employer-sponsored retirement plans like 403(b)s average around 0.71%, with per-capita administration fees averaging $309.63 annually. However, fees can vary significantly depending on your plan provider and investment options, making a detailed fee analysis crucial for your decision.
How much can high 403(b) fees cost me over 20 years?
A seemingly modest 0.50% annual fee difference can compound into tens of thousands of dollars in lost returns over decades. According to Pew Trusts research, a 1% difference in annual fees can reduce your retirement balance by 20-25% over 30 years due to compound interest working against you.
Should I roll over my 403(b) to an IRA or leave it with my former employer?
The decision depends on comparing total costs, investment options, and convenience factors. Rolling over to a low-cost IRA often provides better investment choices and lower fees, but some employer plans offer institutional-class funds with rock-bottom expense ratios. Use a fee analysis checklist to compare your specific situation.
How can I find hidden fees in my current 403(b) plan?
Services like Beagle Financial specialize in uncovering hidden 401(k) and 403(b) fees by analyzing plan documents and fee disclosures. They search Form 5500 filings and other databases to provide comprehensive fee analysis. You can also request fee disclosure documents directly from your plan administrator.
What happens to my 403(b) if I don't roll it over when I leave my job?
Your 403(b) typically remains with your former employer's plan, but you may face higher fees, limited investment options, and difficulty tracking multiple accounts. By mid-career, the typical American has three or more retirement accounts, and many lose track of at least one, creating 'orphaned' retirement money.
Are there free services to help with 403(b) rollovers in 2025?
Yes, services like Capitalize offer 100% free rollover assistance, focusing on digitally shepherding assets into an IRA of your choice. However, paid services like Beagle provide additional benefits including hidden-fee analysis, 0% net-interest loans, and robo-advisory portfolios for more comprehensive retirement planning.
Sources
1. https://meetbeagle.com/employer
2. https://meetbeagle.com/resources/articles/uncover-hidden-401k-fees-fidelity-plan-2025-walkthrough