Determine Eligibility for Transfer
- Transferring funds improperly from your 403b account without depositing the money and securities into a similarly qualified retirement account within 60 days will lead to a 10 percent taxation penalty by the IRS. Ensure that you're following the process properly before you withdraw any money from your account. You don't necessarily need to switch employers to transfer money out of your 403b. In some cases, you can simply choose a different account provider from the ones offered by your current employer.
Inform the Employer
- If you still work with the employer that provides the 403b plan, you'll need to inform them of your intention to transfer the balance of the account and to close it. This is particularly important if you're transferring it into another 403b or rolling over into the 401k plan offered by a corporate employer. The IRS forbids citizens from maintaining multiple 403b or 401k accounts. In some cases, the employer will place the payments that it formerly made into the 403b directly into your salary, although likely in a reduced amount.
Rollover or Transfer
- You can choose to either use a rollover or transfer the funds from your 403b to a new account. A direct transfer simply moves the funds directly from one account to another. This has the advantage of allowing you to transfer any securities held in the account into a new one. Some fees may apply depending on the service providers that you utilize. In a rollover, the plan provider writes you a check for the full value of the account. You will then have 60 days to deposit the check into a new qualified retirement plan to avoid paying the tax penalty.