403b rollover psychological hump

[Miss Piggybank]

Hi everyone. This is kind of embarrassing, because I know the answers, I just need a little reassurance. But I’m guessing I’m not the only person who feels this way about big financial moves. I have a 403b with a brokerage that costs me at least 1% a year in management fees. I left my job 4 years ago, and I plan to roll the whole thing into a Vanguard IRA I already have. Clearly this is the right thing to do, in fact I should’ve done it a while ago but brokerages are good at hiding fees so I didn’t realize what it was costing me to leave my money where it was. But I find it uncomfortable to “fire” people like brokers and doctors, so I feel guilty about moving my money, although I know it’s stupid to feel that way. And I’m nervous about moving what is quite a lot of money, especially if it will involve me receiving a very large check and having to mail it to Vanguard? (I don’t know if it’ll happen that way, that seems crazy to me these days, but from what I’ve read online it’s common to do it that way rather than an automatic transfer of some kind). So I would appreciate a virtual pat on the shoulder that yes this is the right thing to do, and that I should just do it. The instructions on the Vanguard site seem pretty simple. Thank you, MMM community!

[WorkingToUnwind]

You've got this. 1% in fees is pretty crummy. It's time to move you! I would be surprised if you got a physical check, but if that was how they handled it you'd be fine. If it got lost, they'd just void it and send another.

[NotJen]

Just do it!

I found the work 401k rollover super easy.  Because it's normal/expected that eventually you will move the money out when you change jobs or quit or whatever, I would imagine no one will give it a second thought, or be offended.  I'm very happy that I don't have to deal with my old work brokerage (they were fine, but I like having one less thing to keep up with).

Yes, there will probably still be a physical check involved.  But your 403b brokerage will probably mail it directly to Vanguard.  Just be prepared to be out of the market for a while.  I transferred my 401k right in the middle of huge volatility during the early days of Covid, oops, which caused a lot of anxiety.  But everything ended up being fine.

[Sandi_k]

Talk to Vanguard about a "custodian to custodian transfer" of the 4039b) to a DIRECT Rollover IRA. You'll need to open the IRA first, before Vanguard initiates the move request with your current custodian. If you do it this way, no checks in the mail. :-)

You won't likely have to talk with anyone at your current custodian.

[Miss Piggybank]

Thanks everyone, for the advice and support!

[ChpBstrd]

Don't worry about the 403b providers. You are one of many thousands of people every year who come onto their plan or roll out of it. Their business is set up to accommodate normal inflows and outflows. The fees they charge people like you are the fees they don't have to charge employers. So that's how they get their foot in the door to offer workplace benefits plans, but the fees do you no good now that you're not an employee. This business will continue with or without you.

Worry more about getting the rollover right! Talk to people on the phone from both brokerages to get help and ensure it is either a direct rollover or a trustee-to-trustee rollover. Fill out the form to have the money or assets sent directly to your new account via electronic means, if possible. This prevents tax withholding and makes the paperwork simpler.

https://www.ellevest.com/magazine/retirement/401k-rollover-mistakes

[charis]

I did this exact thing two years ago.  Rolled over a 403b from a prior employer to Vanguard - had to open a rollover IRA, there wasn't an option to roll it into my current Vanguard IRA or Roth IRA.  I did not receive any checks in the mail, the money when directly to Vanguard.

[lhamo]

You can do it!  I did this back in 2015 with my Roth 403b.  Moved from Fidelity to Vanguard via direct rollover option.  Didn't need a check.  It did take my money out of the market for a few days, but not as long as if a check had been involved.

I did keep some of my retirement money at Fidelity because I like their tools. Eventually put an inheritance into a brokerage account there, too.

[clarkfan1979]

Don't let them send you a check. If you cash it, the money becomes taxable. I did a 401a rollover 4 years ago. I had to be clear that I didn't want a check and I wanted a custodian to custodian transfer. 

[JupiterGreen]

OP 100% get this, nothing stresses me out more than making big transfers. I just sold a house and it was super stressful to have the funds in limbo before they hit my account. And I also have to admit that I am currently in the same boat as you and have yet to move some funds I have sitting in TIAA. Has anybody successfully done this with TIAA and if so are there any special considerations with them or reasons to keep funds there? I haven't looked into it in a while but last time I spoke with them about moving the money out (I no longer work for the employer) they were like "no you don't want to do that" and the conversation left doubt in my mind so I left the funds there. I'll have to look at the fees, maybe they're not that bad (or maybe I'm just making excuses for continued inaction).

[charis]

Don't let them send you a check. If you cash it, the money becomes taxable. I did a 401a rollover 4 years ago. I had to be clear that I didn't want a check and I wanted a custodian to custodian transfer.

Is that correct?  I thought, from my research a few years ago, that if you received the check and redeposited the money into the new IRA within 30 days (or something like that), it was treated as a rollover.

[Financial.Velociraptor]

Don't let them send you a check. If you cash it, the money becomes taxable. I did a 401a rollover 4 years ago. I had to be clear that I didn't want a check and I wanted a custodian to custodian transfer.

Is that correct?  I thought, from my research a few years ago, that if you received the check and redeposited the money into the new IRA within 30 days (or something like that), it was treated as a rollover.

Yes, but the check issuer will send you 80% and send 20% to the IRS as "backup withholding".  You have to have the extra 20% in cash to make it work or you end up with a 1/5th distribution of your funds.