Nonprofit companies can offer 403b retirement savings plans to their employees. However, if you leave the company, you might want to take your investments to a new plan, such as a plan with your new company or an IRA. Knowing your options will help you make the best decision for your individual circumstances.
New Employer Account
If you left the organization that you had your 403b plan with for another job, you should investigate your new company's available retirement plan options. Your new company might offer another 403b plan or 401k plan that would maintain the tax-deferred status of the account. This would allow you to take advantage of the investment options offered by your new company's retirement plan. In addition, if you plan to make regular contributions to your new company's plan, you would benefit from the simplicity of having all of your assets in one place.
If you did not start a new job after leaving your company with which you had the 403b account, your new job does not offer an employer-sponsored retirement plan or you simply want more individualized control over your retirement assets, you might want to roll over the money from your 403b plan into a traditional IRA. With a traditional IRA, you preserve the tax-sheltered status of the money and you are no longer limited to the investment options given by your company. You are free to start a traditional IRA with any investment firm and you can choose from a wider range of investment options.
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Rolling over money from a 403b plan to a Roth IRA is not right for everyone. Both accounts protect the tax-sheltered status of the money, but you move the money from a tax-deferred account to an after-tax account. This means that you have to include the amount of the rollover as taxable income on your income taxes the year that you complete the rollover, but you will be able to take tax-free distributions from the account. However, this may not be a good idea if you have reached retirement age because you must wait five years before accessing the money rolled into a Roth IRA to avoid penalties.
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