problem doing 403B to IRA rollover
My client filed paperwork with an Insurance Company to transfer his 403B to a self-directed IRA. The insurance company told him that would be
a taxable event and he should file transfer paperwork to another 403B. I thought after 2007 403B rollovers to IRAs were allowed. In searching this forum I saw that there apparently are conditons – such as separation from service and age 59.5 – and he indeed is over 59.5, but still is working.
Can we tell the insuarnce company they are wrong? Can we quote them a regulation? If not, he’ll have extra expenses if he needs to open a separate 403B. Thanks!
Permalink Submitted by mk foss on Fri, 2009-08-21 16:53
The IRS regulations give you the most liberal interpretaion of the law. 403B arrangements are governed by contracts which can impose restrictions more severe than the regulations. There are some contracts that prevent or greatly resttict transfers to IRAs. The way around it is to transfer the 403B to an institution with a more liberal rollover policy.
Writing a letter to the insurance company would only work if they were not following their own rules, they can’t be compelled to use the IRS regulations.