403b retitling to IRA
I have a friend who is a retired teacher, He has a 403b (annuity) and is out of surrender period, and I believe he should re-title it to an IRA before taking distributions. Are there any cons (or other advantages) that should be contemplated? The annuity was effective in 2002.
Permalink Submitted by Alan Spross on Fri, 2012-06-08 19:43
An IRA can provide him with more and probably lower cost investment options and/or beneficiary options depending on the IRA custodian selected. Creditor protection may not be as good if he lives in a state that does not protect IRA accounts from creditors.
If he had a 403b balance on 12/31/1986 for this plan, RMDs do not have to reflect that portion of the total balance until age 75. An IRA rollover will subject the entire balance to RMDs at 70.5.
If he does the IRA rollover, he should request a direct rollover to avoid the 20% withholding.