Retirement Forum

BellaBella · Newbie Joined: 21 Mar 2009 Posts: 2

I am quitting my current job and moving to a new employer. I'm reluctant to roll my 403B over to an IRA because I'd be locking in the terrible market results of the last year. Should I just keep the account open with my current employer and just let the acct grow back or go ahead and roll over to an IRA?

johnb · Newbie Joined: 02 Nov 2006 Posts: 42

The answer to your question really depends on what kind of investment options you have in your current 403B and how comfortable are you in general in picking investments. Rolling your 403B does not necessarily imply that you are locking in current market results because you will be investing those funds in an IRA and they will recover if the market recovers and/or your investments in the IRA perform well. The main advantage to an IRA is that you have a much bigger menu of investment options to choose from than a typical 401k or 403b Plan. So the real question you have to answer is that - How comfortable are you in picking investments and managing your own IRA?

BellaBella · Newbie Joined: 21 Mar 2009 Posts: 2

My risk tolerance is high and I lean towards index funds/index eETFs. My concern is that when I sell my investments today, I lock in the terrible results of the last year. I guess your point is that as long as I turn around and invest the proceeds back into an investment in the similar asset class, I'll still see the benefits of any market rebound and have the advantage of getting into the entire investment workds of options through an IRA.

Another follow up question. Can I roll the proceeds into a Roth IRA (already have one existin), or does it have to be a traditional IRA? I guess I'd probably have to pay taxes at some point if it were to go into a Roth.

johnb · Newbie Joined: 02 Nov 2006 Posts: 42

You are tight on both counts. You should participate in any market upside in your rollover IRA. The only thing you might miss out is any market movement (up or down) during the period when your rollover is being processed out of the old 403b plan and into the new IRA.
As for a 403b rollover into a Roth IRA, it is technically doable but you will have to pay income taxes on any amount you rollover in the year you do the rollover. A rollover to a traditional IRA will be tax free and you wont have to worry about any taxes.