In-Service Distribution
Hello,
A client is thinking about initiating an in-service distribution from his 403b plan. Is there any article that provides a nice overview of pros and cons I can share with the client.
Thanks.
Hello,
A client is thinking about initiating an in-service distribution from his 403b plan. Is there any article that provides a nice overview of pros and cons I can share with the client.
Thanks.
Permalink Submitted by Alan Spross on Tue, 2011-03-22 21:47
What is the purpose of the distribution?
1) Hardship distribution
2) Plan Loan
3) Rollover to another plan
The obvious drawback is that both 1 and 2 above depletes retirement plan assets to one degree or another, but the specific need might either justify the distribution or simply be the only option left. A rollover to another plan may provide better investment options, lower costs or both.
The rules for 401k and 403b plans are very similar with respect to these issues. One notable difference is that any distribution from a 403b plan is deemed to come first from pre 1987 accruals, which are not subject to RMDs until age 75.
The first step is to determine what options exist with the particular 403b client has.
If you can narrow down the situation a little more, I may be able to locate something that is more specific to the case.
Permalink Submitted by Tony Yang on Wed, 2011-03-23 01:57
Thanks Alan,
Sorry for the confusion.
In-Service distribution and rollover to an IRA is what I meant to say. The client does not need to withdraw from his retirement assets until he retires in another 5yrs. We discussed the idea of taking an in-service distribution and I was hoping to find few articles from other industry experts for him.
Hope this clarifies the issue.
Thank you again.