403(b) to an IRA while plan participant still working???
I’m an advisor who has a client who is a school teacher. She has a 403(b)/TSA through Northwestern Mutual Life. Northwestern Mutual Life is discontinuing their service of their 403(b)’s at the local school district due to new regulatory issues, so my client will be starting a new 403(b) through The Hartford. She has approximately $250,000 in her “old” NML 403(b)/TSA with NML.
My questions are: (1) is there any reason why she couldn’t or shouldn’t roll the old 403(b)/TSA to an IRA with a different provider? (2) would anyone know if NML charges surrender penalties if/when we do this rollover? I would like my client to take advantage of the stretch IRA. Thanks!
Permalink Submitted by Al Fry on Tue, 2008-06-03 04:34
Is she over 59.5?
Permalink Submitted by Kelly Steele on Tue, 2008-06-03 04:47
Alfry,
Yes, she is 59 1/2, by only a few months. Is her age a significant factor and if so, in what way? I’m anxious to learn how to solve these rollover issues…..!
By the way, she plans to work 2-4 more years.
Thanks for your help! I appreciate it very much.
Permalink Submitted by Al Fry on Tue, 2008-06-03 16:03
She should be able to move the NWM 403(b) into an IRA. If there is any grandfathered money in the 403(b), the grandfathering would be lost.
Permalink Submitted by Kelly Steele on Wed, 2008-06-04 15:13
So, would it be smarter to move my client’s 403(b) to another 403(b) so we won’t lose her grandfathered money (which she has), instead of moving it from a 403(b) to an IRA? Would we still be able to do the “stretch” (my custodian would be either Pershing or Franklin Templeton)? Thanks again!