Author Topic: 457 and ROTH 403b, can I touch it?  (Read 534 times)

nsmall

  • Stubble
  • **
  • Posts: 131
457 and ROTH 403b, can I touch it?
« on: April 26, 2021, 07:34:43 PM »
Before I came to this site, I thought it was smart to have a ROTH 403b.  I no longer contribute to that. 

I am about to quit my job at a school district and move to a new state. I am thinking long term and read this (https://www.madfientist.com/how-to-access-retirement-funds-early/) which didnt really answer my questions below:


1. Can I move this ROTH 403b from my school district account into my Vanguard Brokerage Account and have access to it before I turn 59.5?

2. I also have a 457, can I move my 457 from my school district account into my Vanguard Brokerage Account and have access to it before I turn 59.5?

3. On an unrelated note, I also have a regular 403b and I was just planning to not convert it like mentioned above in the article or touch it until I am 59.5 as its only 70k. 

I was planning to call Vanguard, but I wanted to start here first.  Thanks in advance.  Appreciate any advice.  Feel free to ask any questions. 

nsmall

  • Stubble
  • **
  • Posts: 131
Re: 457 and ROTH 403b, can I touch it?
« Reply #1 on: April 26, 2021, 07:38:22 PM »
Another side note, here is who the money is currently with...https://www.calstrs.com/pension2

I just have the regular stuff, Vanguard total (stock, international, bonds) in my 457 and 403b

I just want to be informed with the correct information as I see people saying I have to keep my 457 with my district, for example, in order to touch it penalty free.  Thanks again.

terran

  • Magnum Stache
  • ******
  • Posts: 3480
Re: 457 and ROTH 403b, can I touch it?
« Reply #2 on: April 26, 2021, 08:08:31 PM »
1. Yes, but you'll own tax and a 10% penalty on the earnings. You'd be better off rolling over to Roth IRA at which point you can withdraw the amounts you originally contributed at any time without tax or penalty. The earning will have to wait until you're 59.5.

2. Yes, but you'll tax on the full amount withdrawn. You'd probably be better off leaving it in the 457(b) and withdrawing it as you need it so you can avoid spiking your income very high in one year by withdrawing it all at once. If the fees on the 457(b) are quite high and/or the investment options are bad then you could consider rolling it over to a traditional IRA, but then you'd lose the penalty free early withdrawal advantage of the 457(b) and be stuck with the withdrawal options discussed in the Mad Fientist link you posted.

3. You can leave the traditional 403(b) where is if you want, or you could roll it over to traditional IRA. This would give you access to more investment options, which might be good if your 403(b) has high fees or bad investments. It would also let you withdraw early using one of the methods in the link you posted.

From you second post it sounds like you have good investment options at in your employer plans, so I would definitely leave your 457(b) where it is for the penalty free withdrawal.

nsmall

  • Stubble
  • **
  • Posts: 131
Re: 457 and ROTH 403b, can I touch it?
« Reply #3 on: April 26, 2021, 11:19:41 PM »
Thanks for your help.  Sounds like I will not touch the 457 as the fees are reasonable and choices are good for investments with my vendor I choice.

As for rolling the ROTH 403b into a ROTH IRA, I have no idea how much of the current value is money I invested vs interest/dividends. 

Who keeps track of these numbers?  That was a real question.

Since I have ROTH 403b and a traditional 403b, if I moved these funds to Vanguard, I am assuming they would be able to separate them accordingly? 

Thanks again

yachi

  • Pencil Stache
  • ****
  • Posts: 658
Re: 457 and ROTH 403b, can I touch it?
« Reply #4 on: April 27, 2021, 08:37:45 AM »
As for rolling the ROTH 403b into a ROTH IRA, I have no idea how much of the current value is money I invested vs interest/dividends. 

Who keeps track of these numbers?  That was a real question.

Since I have ROTH 403b and a traditional 403b, if I moved these funds to Vanguard, I am assuming they would be able to separate them accordingly? 


Your 403b provider should have record of your contributions.  Also, I think you are supposed to report Roth contributions on your taxes, even though they don't affect your tax return.  I doubt there are consequences to not reporting them, and I don't know when the IRS started requesting the information, so it may not be a perfect record.  You should check with your 403b provider before you move everything over because record of when contributions were made may not transfer correctly when you do the rollover.

Just to clarify terran's response.  Moving retirement accounts or education savings accounts or health savings accounts into a Brokerage Account is considered a distribution, because brokerage accounts are not tax-protected accounts.

Edit- missed the not, completely changing my intent
« Last Edit: April 27, 2021, 08:52:52 AM by yachi »

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 6008
  • Age: 36
  • Location: Seattle, WA
    • My blog
Re: 457 and ROTH 403b, can I touch it?
« Reply #5 on: April 27, 2021, 10:50:32 AM »
As for rolling the ROTH 403b into a ROTH IRA, I have no idea how much of the current value is money I invested vs interest/dividends. 

Who keeps track of these numbers?  That was a real question.

Since I have ROTH 403b and a traditional 403b, if I moved these funds to Vanguard, I am assuming they would be able to separate them accordingly? 


Your 403b provider should have record of your contributions.

Yes. When you do a rollover you'll receive a 1099-R at tax time from the 403(b) provider. This document should state the amount of Roth contributions. In my experience rolling over such an account they'll be able to get you a separate rollover check (and 1099-R) for the Roth portion and the traditional portion. If you saved your W-2s for the years you contributed to this account the contributions should also be listed in Box 12 of that form for each year.

Quote
Also, I think you are supposed to report Roth contributions on your taxes, even though they don't affect your tax return.

This is false. No requirement or ability to report Roth contributions in the year you make them. The first time you need to report them yourself is when you take an early distribution, so save your records of how much that was!

terran

  • Magnum Stache
  • ******
  • Posts: 3480
Re: 457 and ROTH 403b, can I touch it?
« Reply #6 on: April 27, 2021, 11:15:39 AM »
Agreed, your 403(b) custodian should be keeping track of your contributions. I'm fairly sure they'll send you a 1099R for the year you do the rollover that will indicate the total rollover and the amount that's contributions, but I'm not totally certain as I haven't rolled over a Roth employer account yet.

It might be worth seeing if you can download account statements that show your contributions just in case. In Fidelity I was able to find a way to generate a consolidated statement for up to 10 years worth of transactions that shows contributions by type (employer, traditional, Roth, etc).

It's also possible Roth contributions show up on your W2, but I've never made Roth contributions to an employer plan, so I'm not sure. It looks like they should probably be in Box 12 with code BB

You actually don't report Roth contributions anywhere on your taxes when you make them that I'm aware of (and I do my taxes "by hand" so I doubt I'm missing it) except if you claim the savers tax credit and even then you wouldn't separate what you report by type of contribution.

yachi

  • Pencil Stache
  • ****
  • Posts: 658
Re: 457 and ROTH 403b, can I touch it?
« Reply #7 on: April 27, 2021, 11:59:18 AM »
Thanks for correcting me on reporting of Roth contributions to the IRS.  I looked back on my tax fillings and it wasn't reported anywhere, not sure what I was misremembering...

EvenSteven

  • Pencil Stache
  • ****
  • Posts: 617
  • Location: St. Louis
Re: 457 and ROTH 403b, can I touch it?
« Reply #8 on: April 27, 2021, 05:10:23 PM »
Even though you donít report it, your Roth IRA provider should issue a form 5498 that documents your contributions for the year and the year end value of your Roth

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 6008
  • Age: 36
  • Location: Seattle, WA
    • My blog
Re: 457 and ROTH 403b, can I touch it?
« Reply #9 on: April 27, 2021, 07:09:05 PM »
Even though you donít report it, your Roth IRA provider should issue a form 5498 that documents your contributions for the year and the year end value of your Roth

Yep. Save those! If you discarded them you can request a free "transcript" from the IRS for the past ten years. Older than that and you're on your own. Hope the brokerage has good records, I guess.

nsmall

  • Stubble
  • **
  • Posts: 131
Re: 457 and ROTH 403b, can I touch it?
« Reply #10 on: April 28, 2021, 10:19:10 PM »
Thanks for your help everyone.  Really appreciate your help.