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Hi,

I'm a very new Fool with a question. My school district offers a 403(b) and I was thinking about investing in it. I've already got a Roth IRA and as soon as the credit cards are paid off (4 months) I'm going to start maxing out my contributions.

The question is, I don't plan on working with the district for long so is the 403(b) a good idea? Can I take the money that I get from there, should I decide to leave, and put it in a Rollover IRA without affecting my Roth? From the Rollover can it go into 401k with out any penalties?

I just want to make sure that I understand everything before I start making any contributions.

Thank you.
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I'm not sure about being able to roll over your 403b, but expect that you can, so I'll answer the second half of your question. Check with another on your first half.

IF you can roll it over, it will not effect your Roth. Also, if you do roll it over, be sure to specify that it is a ROLLOVER IRA. This will let you roll it over again to a future employer's 401k, if you choose. If you put it into a regular IRA, you cannot roll it into a 401k later. The only difference is the name and the ability to roll it over again.

However, if you do roll it into a 401k in the future, you will be limited to your employer's mutual fund choices. If you keep it in your Rollover IRA, you can choose ANY mutual fund, or stock or bond..., YOU want.

DFF
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Greetings, Cmitchel, and welcome. You wrote:

<<I'm a very new Fool with a question. My school district offers a 403(b) and I was thinking about investing in it. I've already got a Roth IRA and as soon as the credit cards are paid off (4 months) I'm going to start maxing out my contributions.

The question is, I don't plan on working with the district for long so is the 403(b) a good idea? Can I take the money that I get from there, should I decide to leave, and put it in a Rollover IRA without affecting my Roth? From the Rollover can it go into 401k with out any penalties?>>


I'll leave the "good idea" part for you to decide. In general, you will be able to move those proceeds to an IRA when you leave that job; however, if it's in an annuity rather than a fund, then some companies may restrict your ability to do so all at once. If you can move the funds, it will not restrict your ability to use a Roth IRA. Also, 403b money may only be transferred to another 403b plan. It cannot be transferred to a 401k plan nor can 401k money be transferred to a 403b plan.

Regards..Pixy
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Pixie, You wrote,

Also, 403b money may only be transferred to another 403b plan. It cannot be transferred to a 401k plan nor can 401k money be transferred to a 403b plan.

It is my understanding that if you have left the employer where the 403(b) plan is withheld you can move that fund into a traditional IRA.

Am I correct? If not, I've made a couple of transfers I shouldn't have made!

Gemstarman
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<<It is my understanding that if you have left the employer where the 403(b) plan is withheld you can move that fund into a traditional IRA. Am I correct? If not, I've made a couple of transfers I shouldn't have made!>>

If they allowed the transfer to a self-directed IRA, you should be OK. The problem with 403(b)s (IMO) is the rules that restrict you from moving your funds..
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Gemstarman writes:

<<It is my understanding that if you have left the employer where the 403(b) plan is withheld you can move that fund into a traditional IRA.

Am I correct? If not, I've made a couple of transfers I shouldn't have made!>>




Yes, that's correct. That's not the same thing as transferring the money to a future employer's 403b plan. If you want to do that, then you cannot add anything else except 403b money to your rollover IRA(s).

Regards..Pixy
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