Rollover 403b - IRA vs 403b

Should I rollover 403b or should I leave the 403b plan alone?

Apart from reasons for 403b rollover discussed previously, there are two other reasons why you may wish to leave 403b plans assets in a 403b plan, rather than a rollover 403b to IRA:

   1. An employee does not have to take required minimum distributions of pre-1987 403b plan assets (the plan should be checked for any alternate age).

   2. A federal law called ERISA protects some 403b plans. IRA assets are not ERISA -protected. However, some states' laws regarding IRAs might provide the same level or more limited protection to IRA assets. ERISA provides, among other things, certain benefit anti-cutback and bonding rules.

How much time does an employee have to make a 403b rollover after the employee receives the 403b assets?

The employee must rollover 403b assets to an IRA within 60 days from the date the employee received them from the 403b plan.

Is there any withholding on a 403b rollover?

    * No, if the 403b rollover is a direct 403b rollover from the custodian of the 403b plan to the IRA custodian.

    * Yes, there is 20% withholding if the 403b rollover distribution is eligible for 403b rollover and the check is made to the name of the employee or for the employee's benefit. In order to avoid paying income tax on the 20% withheld, if desired, the employee must contribute that amount out-of-pocket to the IRA within the 60-day limit of the 403b rollover.