Author Topic: IRA rollover: 403b / 457b / both / neither?  (Read 687 times)

bortman

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IRA rollover: 403b / 457b / both / neither?
« on: August 03, 2018, 09:58:25 AM »
I'm 46 and recently left my job. I'm trying to decide if I should roll one, both, or neither into a Vanguard IRA. The "neither" scenario seems unlikely because my primary motivation behind the rollover is to facilitate an IRA to Roth IRA pipeline.

What I'm working with:

* $345k in TIAA 403b w/ 0.06% expense ratio fund + no monthly fee

* 90k in a state/university 457b w/ 0.02-0.04% expense ratio + $6.00/mo maintenance fee = ~0.11% total expense ratio

My concerns: I have penalty-free access to my 457b now because I left my job. This could act as an emergency fund if I'm in a bind. But, expenses with this account are relatively high and fees have climbed significantly since I started the account in 2015.

I'm inclined to roll the 403b to IRA, then commence Roth IRA pipeline while leaving the 457b alone (for now).

Are there any major flaws in this, or other considerations?




Bird In Hand

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Re: IRA rollover: 403b / 457b / both / neither?
« Reply #1 on: August 03, 2018, 10:12:09 AM »
I'd definitely leave the 457(b) alone.  0.11% expense ratio is still reasonable IMO, and not worth giving up the penalty-free withdrawals.  Maybe keep an eye on the ER and take action if it gets out of control in the future.

As long as you're comfortable with paying the tax now on the Roth conversions, I see no problem rolling the 403(b) into an IRA and starting the conversions.  Some people like to keep a toe in the TIAA water for various reasons, but if you're not into the whole Traditional thing or annuities, I don't see a compelling reason to stay there.

Actually, depending on the type of account you have with TIAA-CREF, you might find that you can't get the money out except in equal installments over 10 years.  I assume you've looked into all that though.

rubybeth

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Re: IRA rollover: 403b / 457b / both / neither?
« Reply #2 on: August 03, 2018, 10:14:06 AM »
* 90k in a state/university 457b w/ 0.02-0.04% expense ratio + $6.00/mo maintenance fee = ~0.11% total expense ratio

Are there any major flaws in this, or other considerations?

DO NOT ROLL OVER THE 457b. The 457b is the perfect account for those who want to access funds before age 59 1/2 without needing to do a pipeline. There is no age minimum in order to access funds in your 457b. Read your plan documents carefully or call them to clarify how distributions work. I think you'll be pleasantly surprised.

terran

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Re: IRA rollover: 403b / 457b / both / neither?
« Reply #3 on: August 03, 2018, 10:37:46 AM »
* 90k in a state/university 457b w/ 0.02-0.04% expense ratio + $6.00/mo maintenance fee = ~0.11% total expense ratio

Are there any major flaws in this, or other considerations?

DO NOT ROLL OVER THE 457b. The 457b is the perfect account for those who want to access funds before age 59 1/2 without needing to do a pipeline. There is no age minimum in order to access funds in your 457b. Read your plan documents carefully or call them to clarify how distributions work. I think you'll be pleasantly surprised.

Not that you need someone else to say it, but +1

bortman

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Re: IRA rollover: 403b / 457b / both / neither?
« Reply #4 on: August 03, 2018, 11:32:40 AM »
@rubybeth thanks for the emphatic reminder. I've preached about the benefits of the 457b in the past and am not planning to roll the 457b (sorry if I made it sound that way), but wanted to put it out to the community to see if there were any not-so-obvious benefits for doing a rollover.

BTW, just after I posted I got the ball rolling paperwork to do the the 403b to IRA rollover. It took me all of 10 minutes between both TIAA and Vanguard.

Bird In Hand

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Re: IRA rollover: 403b / 457b / both / neither?
« Reply #5 on: August 03, 2018, 11:49:43 AM »
BTW, just after I posted I got the ball rolling paperwork to do the the 403b to IRA rollover. It took me all of 10 minutes between both TIAA and Vanguard.

Do you know what kind of contract you have (SA, SRA, GSRA)?  I know when I called TIAA years ago to ask about options for eventual rollover, part of my money -- maybe the part in TIAA Traditional -- was only available as an annuity or a 10 year installment payout.

bortman

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Re: IRA rollover: 403b / 457b / both / neither?
« Reply #6 on: August 04, 2018, 09:26:51 AM »
Do you know what kind of contract you have (SA, SRA, GSRA)?  I know when I called TIAA years ago to ask about options for eventual rollover, part of my money -- maybe the part in TIAA Traditional -- was only available as an annuity or a 10 year installment payout.

I just called and asked if there were any restrictions on the rollover .. phew .. no restrictions. My contract is a GSRA, and on the surface looked like it was classified as TIAA Traditional, but I called TIAA and the rep assured me that I have no TIAA Traditional "products" in my GSRA, so all of it will rollover to my IRA.

I combed TIAA's pdf docs and my own account details before I called to try to figure it out myself. It wasn't obvious from anything that I came across that I was not in TIAA Traditional. I'm glad I called.