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Advice on rollover Roth 403b to Roth IRA

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  • Advice on rollover Roth 403b to Roth IRA

    Any have any advice on this? Recently graduated from residency and now starting fellowship at a different hospital. I contributed to a Roth 403b during residency, and was debating between keeping the money in the 403b vs rolling it over into my Roth IRA. Does anyone have any recommendations? I know that keeping it in the 403b can have certain legal protections that a Roth IRA may not offer. I also know that I'll have to pay taxes on the employer match, which I'm fine with.

  • #2
    Roll it over.


    • #3
      Concur with bovie. Fwiw, many (most?) states afford asset protection to Roth IRAs.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


      • #4
        Most 403b plans are not ERISA qualified and do not have federal anti-alienation asset protection.

        Check your state's Roth IRA asset protection. Last time I looked, about 20% of states do not have unlimited asset protection for Roth IRAs.


        • #5
          As a follow question, looking at the rollover, it says I have pre-tax assets, Roth pre-tax assets, and Roth after-tax assets. I only have a Roth IRA. Do I need to open a traditional IRA to rollover my pre-tax assets? How many rollovers are allowed?


          • #6
            Employer contributions which must be pre-tax will be in the 403b's traditional account. A 403b's designated Roth account can not have pre-tax contributions.

            What this may be is their record keeping of earnings which are taxable if withdrawn < five years from 1/1 of the year of your first Roth 403b contribution. Make sure to do a direct rollover* of all accounts to a Roth IRA.

            Those earnings will not be taxable, the 403b 5 year status is no longer relevant, but are now subject to your Roth IRA's five rule. 5 years from 1/1 of the first year of any Roth IRA contribution or rollover.

            *Note: A direct rollover is usually mailed to you for forwarding to the Roth IRA custodian. This is fine as long as it is paid the Roth IRA custodian FBO your Roth IRA account and not you personally.
            Last edited by spiritrider; 07-16-2022, 04:32 PM. Reason: Oops 403b not 401k


            • #7
              If you do a back door Roth contribution/conversion and do a 403b rollover conversion to your Roth IRA in the same year, does it affect how tax form 8606 is filled out at all ?


              • #8
                You will get the 1099r from the brokers for both the bd roth conversion and the conversion of the rollover.
                Part 1 - only report the after tax contribution
                Part 2 - report the rollover conversion 1099 + the bd roth conversion + basis in the 401k roth= net reportable for tax is the pretax conversion.