How to Convert a 403(b) to an IRA
- 1). Be mindful of the differences between an IRA and a 403(b). Generally, it costs more to maintain an IRA because you must pay for all transaction costs, which are usually paid for by the employer in a 403(b).
- 2). Look into opening a Conduit IRA. Converting to a Conduit IRA provides you with a temporary parking space for your money between 403(b) plans; that is, you can still roll back into an employer's 403(b) plan if it has one.
- 3). Request a direct conversion. A direct rollover is also known as a trustee-to-trustee transfer; that is, you do not touch the money. Contact the institution that manages the IRA you would like to covert your 403(b) funds to. That company will send you the paperwork and let you know the steps you must take to covert the account. It wants your business, so it will help to make the transfer seamless. No money will be withheld for taxes if you do a direct rollover.
- 4). Request a direct conversion. Request a payout from the investment company holding the 403(b) funds. Ask the bank or brokerage house for specific written instructions on how the check should be made out. You have 60 days to roll over the assets into an IRA to avoid tax consequences.
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