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Transferring Combo Pre-Tax/Roth 403b Contributions to a Roth IRA?

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  • Transferring Combo Pre-Tax/Roth 403b Contributions to a Roth IRA?

    Hey everyone. I recently changed employers (internship to PGY2 residency program) and have about $25k of pretax dollars and about $25k of Roth dollars in the 403b from my intern year. I lived at home that year so was able to max it out both the year I started (2020) and year I finished (2021).

    I have a Roth IRA with Vanguard and was wondering if anyone knew:

    1) Am I allowed to transfer the Roth dollars to my Vanguard Roth IRA?
    2) Am I allowed to pay the taxes on the pretax 403b money and transfer that into the Roth IRA as well? If so do I pay the taxes before the transfer/after the transfer/when?
    3) Is there any good reason why I shouldn't consider doing this? The 403b does have some Vanguard investments available so it's not a terrible place to keep it, just wanted to consolidate my accounts if it's feasible.

    Also as an addendum the reason why some of the 403b dollars are pretax and some Roth is because I didn't know that I could make Roth contributions to the 403b until after I had maxed it out in 2020. If I had known about the Roth option I obviously would have gone with that.

    As always appreciate any help!!

  • #2
    1) Yes
    2) Yes but I would just settle this up when you pay your 2021 taxes in the spring of 2022. You definitely pay after the transfer
    3) Probably a good idea but you need to tell us what you expect your 2021 marginal tax rate (plus state) will be.

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    • #3
      2) Sounds like the Lincoln Financial rep I spoke to said they need to withhold the taxes from the pretax money upon transfer so I'll just get documentation of that.
      3) My federal marginal tax rate would be 22% (I'm still a resident) and I file in MA

      Seems like it'll still be beneficial just need to work out the logistics

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