403(b) & 457

Where to rollover 403b?

If you retire or quit your job, you may want to know where to roll over 403(b). Here are some of the rollover options you have.

4 min read

If you have changed jobs or retired, one thing you should consider is what to do with the 403(b) left with your former employer. While you may be tempted to leave the money with your former employer, there may be better options. A rollover can be an easy way to move your retirement funds from 403(b) to a new retirement account.

You can roll over 403(b) into an IRA, traditional IRA, Roth IRA, 401(k), or another 403(b). Generally, the type of retirement account you can roll over a 403(b) plan is determined by the IRS and the tax consequences of the rollover. For example, you can rollover 403(b) to a traditional IRA or 401(k) without triggering income taxes and penalties, if the rollover is done correctly.

403(b) rollover basics

A 403(b) rollover allows you to move funds from the employer that set up your 403(b) plan to another tax-advantaged retirement account. You can roll over your funds when you change jobs or retire after reaching the retirement age of 59 ½.

If you are changing jobs, your employer may force a 403(b) rollover if your retirement account balance falls below a certain threshold, usually $5,000. In this case, the employer will roll over the retirement funds to an IRA of their choice. If the account balance is below $1,000, the employer may force a cashout, and you will receive a check with your balance.

If you retire at age 59 ½ or later, and you don't need the money immediately, you can roll over the retirement funds to another retirement plan to enjoy more investment options and consolidate all your retirement savings.

How to roll over your 403(b)

The first step when rolling over your 403(b) is to decide where you want to move your retirement money. If you have a new employer, you should ask if they allow rollovers from other retirement plans. You can also choose to set up an IRA with a brokerage and roll over your retirement funds to the plan.

When rolling over your retirement money, you may have a choice between direct or indirect rollover. With a direct rollover, the plan custodian transfers the funds directly to the new retirement plan, and it won’t trigger tax penalties. If you choose an indirect rollover, the plan custodian will transfer the funds to you, and you will be required to move the funds into a qualifying account within 60 days. If you take longer than 60 days to deposit the funds, the transaction will be considered an early withdrawal, and you could owe income taxes and penalties.

Once you have decided to roll over the 403(b) money, you will need to authorize the plan administrator to initiate the rollover. You will be required to fill out a form and sign a distribution request form with the old plan. You may also need to complete an acceptance form with the new plan custodian to confirm that the funds will be deposited into an eligible retirement account.

Rollover options for an old 403(b)

The IRS allows roll overs between certain types of tax-advantaged retirement plans. Here are some of the rollover options you have:

Rollover over to an IRA

When you quit your job or retire, you can roll over the 403(b) plan into a traditional IRA. An IRA is set up independently, and it is not sponsored by an employer. It provides the same tax advantages as a 403(b) plan, and it allows you to delay taxes on your contributions and you won’t owe taxes when you roll over your funds into an IRA.

One of the benefits of rolling over 403(b) into an IRA is that you get access to a wider pool of investment options than employer-sponsored retirement plans. Also, there are no income taxes, penalties, or income limitations when you roll over 403(b) into an IRA.

Roll over to a Roth IRA

You can convert your 403(b) plan into a Roth IRA. However, a Roth IRA has different tax rules compared to a 403(b), since it is funded with after-tax dollars. When you do a Roth conversion, you will be required to report the full 403(b) balance as income and pay income taxes on it during the year in which you make the rollover. Depending on the size of your 403(b) balance, the amount of taxes owed can be significant.

However, not everyone is eligible to contribute to a Roth IRA. There are income limitations, and you will be ineligible to contribute to a Roth IRA if your income exceeds a certain threshold. If your income exceeds the Roth IRA income limits, you will be able to convert your 403(b) into a Roth IRA, but you won’t be allowed to contribute to the plan.

Rollover funds to a new 403(b) or 401(k)

If your new employer has a new retirement plan such as 401(k) or 403(b), you can roll over the old 403(b) plan into the new retirement plan. This can be a good option if you want to consolidate your retirement plans and you are comfortable with the investment options offered in your new employer’s plan. If you are moving a 403(b) to a traditional 403(b) or traditional 401(k), you won’t owe income taxes on the rollover.

Benefits of 403(b) rollover

Lower investment fees

A 403(b) may have higher investment fees than other retirement plans like IRA and 401(k), which can affect your investment returns. You can reduce these investment fees by rolling over a 403(b) plan to a plan with lower fees. You should review your 403(b) plan documents to know how much you are paying compared to the fees you will pay in the new retirement plan.

More investment options

403(k) plans have a limited pool of investment options that comprise mutual funds and annuities. These investment options are pre-selected by the employer, and employees have fewer investment choices than in other retirement plans. If you roll over to an IRA, you will have a wider range of investment options, which may include stocks, bonds, mutual funds, REITs, exchange-traded funds, etc.


If you have multiple retirement plans, it can be hectic to keep track of savings, fees, and contributions. Consolidating all your retirement plans into one retirement plan can simplify your retirement plan and make it easier to manage your retirement savings. Also, with a bigger pool of retirement funds, you can earn higher returns when you allocate the funds to high-return investment options.

Drawbacks of 403(b) rollover

Loss of loan benefits

A 403(b) allows participants to borrow against their retirement savings. However, when you roll over to an IRA, you won't be able to borrow against your IRA savings since an IRA does not have a loan provision. However, when you roll over to Beagle, you will be able to unlock your IRA and borrow from your retirement savings at 0% net interest

Loss of creditor protection

Retirement plans set up under the Employee Retirement Income Security Act (ERISA) are protected from garnishment by creditors. ERISA protection applies to most employer-sponsored retirement plans like 401(k) and 403(b), meaning that these plans are protected from bankruptcy proceedings. However, if you roll over 403(b) to an IRA, you will lose creditor protection, and your retirement savings can be garnished in bankruptcy or lawsuit.