How to transfer 403b to Vanguard?

If you are no longer with the employer sponsoring your 403(b) plan, you may consider transferring the 403(b) balance to Vanguard. Vanguard is one of the largest investment advisors in the United States, and it offers a wide pool of low-cost index mutual funds and exchange-traded funds. If you want to transfer your 403(b) to Vanguard, here are the steps you should follow. 

To transfer your 403(b) balance to Vanguard, start by gathering information about your 403(b) plan. Next, open a Vanguard retirement account where you will transfer your 403(b) funds into. Contact your 403(b) plan provider and request a direct rollover; you will be required to provide certain information such as mailing address, name of plan provider, Vanguard account number, etc. Once the 403(b) balance is transferred to Vanguard, you can allocate the rollover funds to various investment options.

What is a 403(b) transfer?

Once you leave your employer, you won’t be allowed to make further contributions to the account. You can decide to roll over the 403(b) balance to a qualified retirement plan such as a traditional IRA, Roth IRA, 401(k), or other 403(b) plan.

You can choose a direct trustee-to-trustee transfer without owing a penalty. However, if you opt for an indirect transfer, the 403(b) plan provider will send you a check, which you must deposit into another plan within 60 days. An indirect transfer may be subject to a 20% withholding tax that is deducted from the distribution.

How to transfer 403(b) to Vanguard

Here are the steps you should follow when transferring 403(b) to Vanguard:

Gather information about the 403(b) account

Before you initiate the transfer process, you should gather sufficient information about the 403(b) plan.

One of the details you should find out is the name of the 403(b) plan provider. This is the investment company that is responsible for managing 403(b) accounts on behalf of the employer, and it is responsible for approving 403(b) transfers. If you don’t know who your plan provider is, check your account statements- the name of the plan provider should appear at the top. Also, check the contact information of the plan provider.

Additionally, you should identify the type of 403(b) plan you have. 403(b) plans fall into two categories- traditional 403(b) and Roth 403(b). If you have a traditional 403(b) plan, you can roll over to a traditional IRA, Roth IRA, or other qualified retirement plans. However, if you have a Roth 403(b), you can only roll over to a Roth account.

Open a Vanguard account

If you don’t have a retirement account with Vanguard, you will be required to open an account where you will transfer the 403(b) funds. You can open an account on Vanguard in less than 10 minutes.

If you have a 403(b) account at Vanguard with your current employer, you may be allowed to roll over your old 403(b) balance into your new 403(b) account for easier management. Check with your new employer if it allows this type of transfer.

If you want to access to a wide variety of investment options, you can decide to open an IRA with Vanguard. IRAs offer more benefits since they are not tied to an employer, and you can invest your retirement money in various investments like stocks, ETFs, bonds, mutual funds, and cryptocurrencies. You can open a traditional IRA if you want to keep your funds tax-deferred, or a Roth IRA if you want to keep your funds tax-free or convert from tax-deferred to tax-free.

Contact the 403(b) plan provider

Once you know who your 403(b) provider is and you have a Vanguard account, contact the 403(b) plan provider to initiate the transfer. The easiest way to contact the 403(b) plan provider is by phone. Check the account statement for the plan provider’s phone number.

Before you call the 403(b) plan provider, ensure you have the information they will need. This may include your Vanguard retirement account number, Vanguard mailing address, and check-related instructions. The check should be made to Vanguard FBO (your name).

Find a quiet place and allow about 20 to 30 minutes for the call. You will be asked to provide personal details such as your social security number and physical address to verify your identity. Once you have verified your identity, you should tell the plan provider representative that you want to do a direct rollover. You will be asked to provide your Vanguard account number and the mailing address of the new plan provider. You can also confirm your 403(b) account information and update your mailing address.

Deposit rollover check (indirect rollover)

At this stage, the 403(b) plan provider has initiated the process of transferring your retirement assets into your Vanguard retirement account. Typically, this process can take 2 to 4 weeks to complete.

However, some plan providers may only transfer the funds to the account owner, not to institutions. In this case, the plan provider will send you a check with your 403(b) balance to your mailing address. You must then deposit this check to your Vanguard retirement account within 60 days. You can mail the check to Vanguard using the mailing address found here or using the Vanguard mobile check deposit.

If the check is misplaced or lost in the mail, you should call the 403(b) plan provider and ask the representatives to issue a new check. The new check will replace the old check, and no one will be able to cash it.

Invest your IRA funds

Once the 403(b) funds have been deposited into your Vanguard account, you should allocate them into investments to grow their value. If you have an IRA account with Vanguard, you can access a pool of hundreds of mutual funds, ETFs, and stocks in the company's portfolio. However, if you rolled over to a 403(b) plan that Vanguard manages for your new employer, you will get access to a limited list of investment options.