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Rolling over 403b money to 457

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  • Rolling over 403b money to 457

    I currently have some money in couple of different 403b accounts with different financial firms from training (residency, fellowship). I was going to roll them over to IRA but never had the chance, which in hindsight was a good idea because then I won't be able to do backdoor roth efficiently? Also those 403bs have access to low ER vanguard institutional index funds. But now I realize that those old separated 403bs are getting hit with quartery account fees (15 per quarter maybe), so I am thinking about rolling them over to current employer's plans, such as a state 457 plan, which also has access to low ER vanguard institutional index funds. Is there any downside of doing that? Thanks,

  • #2
    You are correct that you cannot take advantage of a tax-free backdoor Roth if you r/o to an IRA. Technically, you could still have a back-door Roth but you would pay taxes on at least part of the r/o, so not a good idea.

    If your 457 accepts roll-ins, that would be a good option, given that you have good choices. Another option would be to find some kind of IC work and set up a SOLO-k and r/o to that.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Don't see any problem assuming the 457 accepts rollovers.

      I am hoping to set up a solo 401k as jfox mentions, then you have complete control.  We are planning on using fidelity for that but you would need some 1099 income to set it up initially..

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      • #4
        If you leave an employer with whom you had retirement accounts (eg 401k, 403b, 457b, etc) like in OP's example because s/he completed residency/fellowship but decide to leave those accounts with that employer, are there changes in how the account is handled? For example, does the employer now start to pass the account fees onto those who are no longer employed by them? If so, is this a frequent occurrence?

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        • #5




          If you leave an employer with whom you had retirement accounts (eg 401k, 403b, 457b, etc) like in OP’s example because s/he completed residency/fellowship but decide to leave those accounts with that employer, are there changes in how the account is handled? For example, does the employer now start to pass the account fees onto those who are no longer employed by them? If so, is this a frequent occurrence?
          Click to expand...


          Practically every plan is different. The account fees are already being passed along but it's not easy to find out the exact amount, even though laws have changed to make them "transparent". The old employer may institute a separate charge or can require the account to be rolled out or cashed out if below $5,000, I believe. If you leave a large account behind, however, the custodian is going to be happy to not lose the account.

          Sometimes, because of potential backdoor Roth taxation and a new 401k/403b that does not accept roll-ins, that is the only solution, at least temporarily. Otherwise, it is usually better to not leave your accounts behind but every situation varies.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            Thanks for the feedbacks.

             

            nachos I think those account fees would be there whether or not I am still with the respective employers.

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