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I left the money in that account, since I was told that I could not roll it over into the 401(k) my new employer provided.

This is correct. 403b money cannot be transferred to a 401k, but it can be rolled over to an IRA.

Money disbursed from a retirement plan, put into an IRA, and not commingled with regular money, however, can be rolled back into a retirement plan, right? So (assuming I wanted to), couldn't I move the funds into the 401(k) as a two-step process?

You do not "have to" go to a Roth IRA to roll over your 403b account. The salary limit prohibits you from contributing new money to an IRA, but the money you've already put into the 403b in the past can be put into an IRA without tax consequences.

OK, I misunderstood the way this worked, then.

403b money cannot be rolled directly into a Roth IRA in any case--you would have to first roll it to an IRA, then convert that to a Roth, paying taxes (at your current rate) on the conversion.

That's what I was planning on doing.

Also, my current employer is not matching contributions to my 401(k) yet, so I was planning on contributing to a Roth this year; would the rollover affect my ability to contribute?

Your ability to contribute to a Roth is not affected by 401k participation one way or another. The determining factor is the income limits.

The 401(k) matching reference was more to explain why I'm planning on contributing to a Roth this year in addition to the 401(k). (On a related note, I'm planning on maxing out the 401(k) contribution this year. I've got some large home improvement projects coming up, however, which might limit my ability to do so; if that turns out to be the case, would it make more sense to contribute to the Roth first and then to the 401(k)? I'm in my early 20s, and anticipate being in a significantly higher tax bracket by the time I retire; paying the lower tax now on the Roth is thus better than paying the higher tax later on the 401(k), right?)

The rollover, if you did it, would not be included in your income since it is money you had put away in prior years.

Would it count towards the total allowable contribution to Roth/Traditional IRAs, however?

Again, you do not "have to" go to a Roth, and in view of the taxes you would pay, it doesn't sound advisable to me that you do so. The advantage of rolling over to an IRA would be for greater flexibility of investment options if you aren't happy with the TIAA-CREF funds.

Well, right now the 403(b) money is ithe CREF Equity Index Fund (which watches the Russell 3000), so I'm pretty happy with it. But wouldn't the taxes paid now be worth it in light of the savings against higher taxes later?

Thanks for the comments,


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