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Dear peppermintpatty,

What is the difference between a 403b and a 403b(7)? Will you please explain what a conduit IRA is?

Thanks
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kbetts -

403b refers to tax-sheltered annuities (TSA's), an insurance company product designed to receive periodic contributions on a pre-tax basis, allowing for tax deferred growth until the owner reaches age 59½ and may begin withdrawals without tax penalty (but subject to ordinary income tax on the amount withdrawn).

403b(7) is subject to the same tax rules, however the retirement account is established with a mutual fund family.

The conduit IRA is the "temporary parking place" that people move 401k monies into while awaiting to transfer it to a new 401k plan with a new employer. The monies in the conduit IRA may not be mixed with any other funds (like personal contributions) or it will be "tainted" and unable to be rolled into the new 401k plan. If an account owner doesn't want to roll the old 401k money into a new 401k plan, it's a moot point! These conduit IRA's are not useful for 403b transfers - they need to remain in 403b package in order to later transfer into another 403b plan...

Does this help? PP
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