IRA Transfer to 403b
A 73 year old RETIRED client received a notice from an insurance company acting as the custodian for her old 403b plan. The client still has a 403b balance with this insurance company because the guaranteed rate is 4% and she chose to leave some money in the account. The client is retired and currently has most of her money in an IRA; however, she still has a balance in the 403b because of the 4% guarantee. The notice she received states that she can move any qualified dollars into the 403b account and take advantage of the 4% rate. There are no strings attached and the account is fully liquid with no CDSC. My questions are these….does the law permit the transfer of IRA assets to a 403b account IF the 403b account owner is NO LONGER actively employed? If so, does the IRA assets being transferred have to all originally be from a qualified plan, or can some of the assets be from a contributory IRA? Does it matter that she is over 70 1/2?
Thank you!!
Permalink Submitted by Alan Spross on Mon, 2011-11-21 19:09
The IRS would not have a problem with the rollover, and what the plan will accept is up to the plan itself. But both the IRA and the 403b are subject to separate RMDs (unless the 403b balance is from pre 1987 deferrals where the RMDs do not start until age 75). This means that any rollover from the IRA can only be done if the IRA RMD is taken out first.
Plans that will accept IRA rollovers after the employee has separated are rare, but the IRS rules do not disallow it. Another requirement is that no IRA basis from non deductible contributions is transferred to the 403b. For this reason some plans restrict rollovers to IRA accounts that are titled as “ROLLOVER IRAs”.