Author Topic: Roll 403b into IRA?  (Read 3110 times)

Manguy888

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Roll 403b into IRA?
« on: April 28, 2014, 07:01:46 PM »
Hey mustachians,

I need someone with a financial background to help with this question. My wife is a teacher and can start a 403b, and we really want that for the tax shelter, but unfortunately all of the approved vendors have high fees. They are mostly insurance companies, nothing close to fidelity/vanguard.

My question is: Can we occasionally roll the money from the 403b into an IRA with someone like vanguard? I know that when you leave your job you can roll the whole thing into an IRA - I'm talking about liquidating the account every couple of years .

Thanks in advance!

labrat

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Re: Roll 403b into IRA?
« Reply #1 on: April 28, 2014, 07:08:52 PM »
My 403b funds could not be released until I left employment with the school.  Who is the provider?  I had TIAA-CREF and their funds were pretty good, although expenses were just a bit higher than Vanguard.  When I left, I rolled funds into a Vanguard IRA.

If your wife is planning on staying employed there for a considerable amount of time, she might want to talk to HR/business manager and recommend a different plan provider.

Manguy888

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Re: Roll 403b into IRA?
« Reply #2 on: April 28, 2014, 07:12:07 PM »
companies are:

American Financial Services
AXA Equitable
Great american financial resources organization
Horace Mann
Lincoln investing
metlife
oppenhemier
security benefit group of companies

and that's it...

amha

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Re: Roll 403b into IRA?
« Reply #3 on: April 28, 2014, 07:31:01 PM »
Ugh. I had a 403b from the years I taught; like with 401k plans, you're at the mercy of how your employer has decided to structure it. (After I left, I rolled it over into a Vanguard IRA as well.)

My advice would be to buy the cheapest funds you can (assuming their style is more or less the equivalent of what you would buy at Vanguard). I've heard bad things about American Funds. Maybe Oppenheimer?

bogart

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Re: Roll 403b into IRA?
« Reply #4 on: April 28, 2014, 07:43:01 PM »
I rolled over an old 403b into an IRA back in 2010, and at least when I did that, was told I could only do so for the employer I had left, not my current one.  So I think not, unless things have changed.

Vilgan

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Re: Roll 403b into IRA?
« Reply #5 on: April 29, 2014, 08:50:49 AM »
You won't be able to roll over the 403b into an IRA unless she leaves employment with that school district. That said, even with those choices being questionable it probably still makes sense to explore it if you guys are in the 25% tax bracket as a couple. Pulling out money pre-tax to avoid paying 25% now and likely paying something like 15% later will make up for the low quality options.

The main things to be aware of:

1) They will want to sell an annuity. Don't. This isn't them offering an investment, this is them trying to sell you their main product which is insurance.
2) At least some of these insurance companies ought to offer access to mutual funds that don't suck. They can appear more valid that way and will lose out on some $$ going to legit investments in order to have more people sell their insurance/annuities/high priced funds to.
3) Ask what non-proprietary no load low ER index funds you have access to with each provider. You don't want help picking from an "advisor", they will try to sell you stuff. Be specific about what you are looking for (VTSMX, VGTSX, VBMFX are 3 good funds to ask about) and stay on target and it should be possible to set stuff up to not suck.
4) Avoid any fund which you don't understand or has a load or has an ER above 1% (preferably 0.5%).

Report back how it goes. It seems like a lot of school districts are super lazy about 403b providers and just throw their teachers to the wolves without much guidance.
« Last Edit: April 29, 2014, 08:54:10 AM by Vilgan »

Manguy888

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Re: Roll 403b into IRA?
« Reply #6 on: April 30, 2014, 05:19:44 PM »
Hey guys - quick update. My wife already has a 403b from oppenheimer from a previous teaching job. We looked into that and WOW - there is nothing below .95% fees, even for mutual funds that track an index. It's scary to look at. Metlife is better but still around .46% for the simplest of investments.

From the list, Lincoln investment seems to offer Vanguard funds based on their website. We are in the process of making contact with a rep to get more info. I'm hoping there's no added fee on top of the vanguard fees, but who knows.

In the meantime, we are going to talk to her school about getting some better options. Every single option has a rep attached to it - there's no option to sign up with a website like fidelity and just invest in low cost index funds. It's pretty clear that the representatives made the school's list the same way lobbiest sometimes write legislation

Thanks for all the info!