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Ok, if I'm reading things right: one can not transfer funds drom a 403b to a self-directed IRA unless one is 59 1/2, terminates employment, or in the case of Salary Reduction Agreements, has a financial hardship. Is this the jist of it? Is there no hope of ever being able to trade through one's 403b (or transfering to a IRA) if one is younger than 59 1/2 and still working for the same organization?

Thanks.
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A couple of years ago, Bob Brinker on Money Talk, the PBS show had a lot discussion on how you could transfer the money. A lot of the information came from listeners, so you don't know how accurate it is, or what special conditions are required that they didn't mention. I never checked it out and it may depend upon the contract you have on the 403b. But the best I can recall, this is what was discussed. I too would like to know if this is fact or urban myth.

First, your 403(b)has to offer a money market account within the 403(b). Then you have to set up a 403(b) account with another organization that offers 403(b)accounts and again, it has to have a money market account. My impression was that a lot of mutual funds and some discount brokers will do this. Then you can set up a transfer from one money market account to the other. Your current 403(b) may have some time requirements on how long the money has to be in your account before it can be moved. But other than that you are suppose to be able to set up a monthly automatic withdrawal from one account to the other. Hopefully, the second 403(b) would allow you to make your own investment choices. But if not, it would seem more likely that you could then roll money from the second account to a self directed IRA.

So Pixy or anyone else, is there anything to this approach that warrants further investigation or is it just another myth?
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Ithacat,

<<Ok, if I'm reading things right: one can not transfer funds drom a 403b to a self-directed IRA unless one is 59 1/2, terminates employment, or in the case of Salary Reduction Agreements, has a financial hardship. Is this the jist of it? Is there no hope of ever being able to trade through one's 403b (or transfering to a IRA) if one is younger than 59 1/2 and still working for the same organization?>>

You have got it down correctly. The law is explicit. A 403b plan monies may be invested in annuities and/or mutual funds only. While you are still employed by the organization offerring that plan, under normal circumstances you cannot move it to any other type of investment or IRA.

Regards....Pixy
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CodyZen,

<<So Pixy or anyone else, is there anything to this approach that warrants further investigation or is it just another myth?>>

As far as I'm concerned it's a myth, and in this case more like a shell game. To repeat: While employed at the same place using the 403b, you can't use that money for any other type of investment except annuities and/or mutual funds. The money market moves are within 403b(7) accounts (i.e., mutual funds). Move the money from there to buy stocks, and you've removed the funds from the 403b(7) umbrella. Result: Taxation and penalty if under 59 1/2.

Regards....Pixy
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Pixy,

<<So Pixy or anyone else, is there anything to this approach that warrants further investigation or is
it just another myth?>>

<As far as I'm concerned it's a myth, and in this case more like a shell game.>

Thanks for the input and advise. The approach sounded both too good to be true and too complicated to pursue. But that's often the case.

CodyZen
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...and making the perhaps unwarranted assumption that the plan in question is CREF, you should think more than twice before rolling it anywhere.
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Thanks to Pixy, et al for responding.

One last piece of clarity... I emailed the IRS about this and received a response that implied it was up to a plan's custodian (in my case Fidelity) to determine whether a "brokerage option" was available, Fidelity, however, told me it was prohibted by law. Hmmm.
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