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Subject:  Re: 403(b)(7) to IRA? Date:  7/5/2000  1:55 PM
Author:  TMFPixy Number:  23094 of 96798

Jeanie writes:

<<My sister is a former teacher, now self-employed as an editor/writer. She still has an annuity sitting in a 403(b) account which she's in the process of cashing out. The insurance salesman who sold her the annuity in the first place has told her she CANNOT roll over those proceeds into her SEP-IRA or her Roth IRA, and now she's uncertain just what she can do with that money. Obviously she doesn't want to keep it in a 403(b) but it sounds as though she's being given wrong advice.

She's only in her 40s and would like this money invested in a tax-deferred account, preferably in a growth vehicle of her own choosing, such as an index fund.

Can you clarify?>>

Aha! -- A lurker from within has spoken. :-)

A 403b is a different kind of animal because it can come in both qualified and unqualified form. Your sister's first step is to determine if her old 403b is a qualified retirement plan. Some are not, and when they are not, then the proceeds may not be transferred to an IRA under any circumstances. And even when qualified (and like your sister's plan) they are sometimes invested exclusively in annuities. Often, the annuity may not be surrendered all at once. Instead, it must be surrendered over a period of 10 years. If your sister has one of those, then each year she may transfer a little bit to an IRA. OTOH, if she's in a qualified plan and there are no such restrictions on her annuity, then she can simply surrender the annuity, pay any possible surrender fee, and transfer the net to an IRA.

You state that her insurance agent says she can't transfer the money. That leads me to believe she is in an unqualified 403b plan. Otherwise she should be able to transfer at least some of the money to an IRA.

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