Menu

traditional IRA rollover

Home Retirement Accounts traditional IRA rollover

  • Avatar dsog 
    Participant
    Status: Physician
    Posts: 19
    Joined: 12/28/2017
    Splash Refinancing Bonus

    I have about $150k in traditional IRA funds that I’d like to roll over into a different retirement vehicle so that I can begin doing back door Roth IRA contributions. I have a 403b account with my current employer (TransAmerica account) with somewhat limited mutual funds options. This was my thought for solving this question:

    Open a 403b with Vanguard, roll over my employer 403b into the Vanguard 403b annually, and also roll over my traditional IRA into the Vanguard 403b. Fees are low at Vanguard and options are myriad. Here are my questions about this plan:

    1. Am I allowed to roll over my employer 403b into a Vanguard 403b?

    2. Am I allowed to roll over my traditional IRA into a 403b?

    3. Does this sound like a viable/good idea?

    4. What am I missing?

    Any feedback is appreciated.

    #213582 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 4229
    Joined: 01/08/2016
    Open a 403b with Vanguard

    Click to expand…

    how do you plan on doing that?

    #213590 Reply
    Avatar dsog 
    Participant
    Status: Physician
    Posts: 19
    Joined: 12/28/2017

    That’s one of my questions – is that even allowed?

    #213767 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7950
    Joined: 01/09/2016

    Creative thinking but, unfortunately, an individual is not allowed to open a 403b “quailfied plan”. And, even if you were able to establish such, you almost certainly would not be allowed to roll over your current 403b while you are under age 59.5 and “in service”.

    The best solution I can see for you is to start some kind of profitable side hustle, whether locums, a new business, or something else that I cannot conceive of. Set up a solo-k and r/o the orphan 403b to the solo-k, a plan that is under your control.

    Otherwise, leave your orphan 401k where it is and invest/rebalance appropriately.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #213775 Reply
    Liked by Peds
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2851
    Joined: 09/18/2018

    @Johanna,
    If the existing 403b employer planning has multiple authorized providers, is it possible to switch and transfer balances? For example, better options.

    I believe your point is the employer sets up the plan terms. The provider simply services the individual accounts on behalf of the employer and employee.

    #214188 Reply
    Liked by spiritrider
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7950
    Joined: 01/09/2016

    @Johanna,
    If the existing 403b employer planning has multiple authorized providers, is it possible to switch and transfer balances? For example, better options.

    I believe your point is the employer sets up the plan terms. The provider simply services the individual accounts on behalf of the employer and employee.

    Click to expand…

    Well, sure, but I think the point was that the employer offers limited choices under the current plan. It would be unusual for the existing plan to have multiple authorized providers. One option that the OP may consider is to check to see if the employer has a “brokerage account” option. These typically cost an additional $50/yr and open up the plan to many new investment options. I don’t think many employees are even aware enough to ask about this feature. We’re planning to discuss in an upcoming article to raise awareness.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #214210 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2851
    Joined: 09/18/2018

    Thanks. Looking at one with 5 vendors. Each have a different approach.

    #214292 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7950
    Joined: 01/09/2016

    Thanks. Looking at one with 5 vendors. Each have a different approach.

    Click to expand…

    So, at your current job, you’re trying to move your plan’s 403b to a different vendor? That is interesting that you have so many choices.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #214322 Reply
    Avatar dennis 
    Participant
    Status: Retired
    Posts: 52
    Joined: 04/18/2019

    @Johanna: You are correct that many employees are unaware of the “brokerage account” option. My former employer’s 403b was with Fidelity and they had the option but didn’t well publicize it. I was able to move 90% (max allowed) of the account to the brokerage side and there had almost unlimited investment options. I could set it up that new contributions were also automatically split 90/10. When I eventually retired I rolled it all into a Fidelity IRA so I could then better invest the other 10%.

    #214340 Reply
    Avatar spiritrider 
    Participant
    Status: Small Business Owner
    Posts: 1864
    Joined: 02/01/2016

    Is is not that uncommon for a 403b plan to have a smorgasbord of providers, sometimes as many as 10 – 12. Unfortunately, many will often be high fee annuity contracts. However, it is more common recently for 403b plans to also offer low cost accounts at Fidelity, Vanguard, etc… The 403b annuity legacy is demonstrated that when moving from one provider to another within the plan it is called a contract -> contract exchange and not a rollover.

    The OP needs to come back and tell us if they just have a single limited TransAmerica option or if they were referring to a Vanguard option within their plan.

    #214342 Reply
    Liked by jfoxcpacfp, Tim, Peds
    Avatar dsog 
    Participant
    Status: Physician
    Posts: 19
    Joined: 12/28/2017

    My employer 403b options through TransAmerica are limited to the following:

    -intermediate/long term bond index fund

    -3 options in large cap stock index funds

    -3 options in small/mid cap index funds

    -2 international stock index funds

    -a whole bunch of target date funds.

     

    If no other options are available, I was planning on trying to mimick the US total stock index fund by investing 80% in Vanguard Institutional Index 1 (large cap) and 20% in Vanguard Extended Index 1 (small/mid cap). Thoughts?

    #214601 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 4229
    Joined: 01/08/2016

    Yup

    #214605 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2273
    Joined: 03/01/2018

    regarding your desire to be able to do backdoor Roth without pro rata taxation: Will your 403b accept an IRA rollover?

    Then, regarding investment options and expenses within the plan. Re-read the above replies. Are you able to “transfer” your plan assets from Transamerica to some other provider that is already setup with the plan? Talk to HR / plan administration.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #214606 Reply
    Avatar spiritrider 
    Participant
    Status: Small Business Owner
    Posts: 1864
    Joined: 02/01/2016

    My employer 403b options through TransAmerica are limited to the following: intermediate/long term bond index fund. 3 options in large cap stock index funds, 3 options in small/mid cap index funds, 2 international stock index funds, a whole bunch of target date funds.

    If no other options are available, I was planning on trying to mimick the US total stock index fund by investing 80% in Vanguard Institutional Index 1 (large cap) and 20% in Vanguard Extended Index 1 (small/mid cap). Thoughts?

    Click to expand…

    It is still not clear from your original, subsequent and this post. If TransAmerica is your only 403b provider option, the Vanguard Index funds you are referring are part of the TransAmerica offerings or you are still referring to a direct option at Vanguard which we told you is not possible.

    #214716 Reply
    Liked by Peds
    Avatar dsog 
    Participant
    Status: Physician
    Posts: 19
    Joined: 12/28/2017

    Yes, traditional IRA funds can be rolled over into my employer Transamerica 403b without penalty.

    The 403b options previously listed are all part of my employer’s Transamerica 403b, including the Vanguard Institutional Index 1 (large cap) and Vanguard Extended Index 1 (small/mid cap) that I was proposing to invest in.

    Based on feedback, rolling my employer 403b into a new/separate Vanguard 403b is not possible.

    #214741 Reply

Reply To: traditional IRA rollover

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear