I've got a small chunk in a 403(b) custodial Plan with my employer and I just read through the Annunities information and was floored. Does anyone know if there is any way to convert it over time or as a lump to a Roth? In 98, the employer allowed IDP for the 401(k) plan, which I now max out. The annuity article has my head swimming with all kinda ugly stuff.
If you have a 403(b)7 plan then you have not been suckered into an annuity. 403(b)7's invest in mutual funds, while a 403(b) invests in annuities. Not quite sure on the Roth implications, but there are others here who can answer that question. For a great analysis on annuities, check out TMF Pixy's post #11,725 on this board.Dodgeball
Greetings, Goldtut, and welcome. You wrote:<<I've got a small chunk in a 403(b) custodial Plan with my employer and I just read through the Annunities information and was floored. Does anyone know if there is any way to convert it over time or as a lump to a Roth? In 98, the employer allowed IDP for the 401(k) plan, which I now max out. The annuity article has my head swimming with all kinda ugly stuff.>>You may or may not have a Tax Sheltered Annuity within your 403b plan. Your subject line talks about a 403b(7), which is the section of the Internal Revenue Code that addresses the investment of 403b contributions in mutual funds, not annuities. A 403b plan may only invest in annuities and/or mutual funds. My guess is you have a mutual fund investment, but check with your HR folks to be sure.If you have an annuity and if your employer makes no matching contribution to the 403b plan, then you can move those funds to a mutual fund family that accepts 403b(7) money. Vanguard and Fidelity do so. That would give you a much broader selection for the investment of your account. However, to do so you would have to surrender that annuity. That could involve surrender fees that would make such a transfer less attractive.Search this board on the topic 403b plans, and you will come up with a slew of posts that talk to this issue and will give you a better feel of what you can do with the plan you now have.Regards..Pixy
Thanks Dodgeball and Pixey; what a load you both took off me. I did look around post 11725 and what fabulous stuff info is in and around that. Thanks again, I have lots of reading to do.
I have a small chunk in a 403(b) too and I'm just wising up. It's in a fixed annuity earning around 6%. Ouch! I called and railed at my agent who told me I have 3 more years before I can roll it over then tried to get me to switch it to a variable with the same company. Still not a good deal...too many charges, too many fingers in the pie. I'll quit paying in, now, and let it sit until I can move it, but what an expensive lesson. According to my agent, I'm stuck for 14 years (just 3 more to go) but if I switch the 10% to a variable,(the company will generously "allow" that each year) then I'm in for another 10 years, automatically. She didn't mention that fact until I pressed the issue.
goldtut -First of all, don't be floored or let your head swim with all kindsa ugly stuff about annuities - they're not all that bad (the article reflects the opinion of the authors...).Now, regarding your 403b(7) custodial account... It sounds like you still work for the the same employer. If that's so, you'll keep the account open until you terminate your employment there. Then you may rollover the 403b(7) account to a traditional IRA & subsequently convert it to a Roth IRA. Awkward? Yes, but it's the correct procedure.Any more questions?Best wishes, PP
Jane -The 10% transfer "allowance" may actually be available to you to transfer part of your balance anywhere, including using "Revenue Ruling 90-24" to make partial transfers to another 403b or 403b(7) account. The only sticking point may be your employment... are you still employed with the same school/non-profit where you began the annuity? That could restrict your options to another "like" account, rather than IRA, etc.Good luck, PP
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