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Greenwich3

403B To Ira Rollover

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Since I am now retired from service as well as turning 59 1/2 in a few weeks, I am planning to rollover my Vanguard 403B to a Vanguard IRA. This will now allow me to use Admiral Shares which weren't available in the 403B.

 

I was just wondering if there was any reason to not do the rollover.

 

Thanks

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Greenwich

 

I can't think of one. You can duplicate the funds you own in your Vanguard 403b and get even lower costs going the IRA route. The Vanguard 403b funds have a higher expense ratio and if I remember correctly do not offer Admiral shares. Its particularly a great idea for folks who want to escape bad 403B plans with high fees to transfer to a traditional IRA. Now if you are planning to move it to a Roth IRA you need to be aware you will have a tax consequence.

 

 

This may help too:

 

http://m.403bwise.com/wisemoves/irarollover_vt.html

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If any of the 403b contributions were made prior to 1987, they don't have to be subject to RMD until age 75. That can be an advantage if you don't expect to need the RMDs for living expenses. My wife kept her 403b at TIAA and was able to defer her pre 1987 contribution's RMDs until age 75. I moved my 403b to Fidelity and VALIC IRAs and had to start RMDs on all of it at age 70.5. Neither of our decisions took in to consideration this feature. https://www.mhco.com/BreakingNews/A403bRMD_031914.html

 

I think I would probably opt for the lower ERs of the IRA over the delayed RMDs if I were in your shoes.

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Hi Greenwich,

 

Yes, you want to get out of your employer's plan. You don't need to keep paying their Third Party Administration costs any more.

Congrats on your retirement!

 

Best regards,

Steve

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