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Michael Eastham, CPA, PFS, is the founding Principal of Fellowship Financial Group in Maitland, Florida. Eastham has been involved in financial services for more than 25 years. He is an active member of the American Institute of CPAs and has earned their Personal Financial Specialist (PFS) designation. He has a BBA in Accounting from James Madison University and holds Series 65 & 63 securities licenses, as well as licenses in Insurance and Annuities.
Eastham is the author of the bestselling book Common-Sense Income Strategies and is a recognized specialist in the areas of financial strategies, retirement planning, and asset protection. He is the host of the financial radio show, The Retirement Income Show.
His companies have grown out of a passion for excellence, coupled with a desire to serve families and business owners in accomplishing their financial goals using common-sense investment strategies. Michael and his wife Vickie have four children and reside in Lake Mary, Florida….(read more)

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When Should I Transfer My 403b to an IRA?

If you’re employed in the education, medical, or non-profit sector, chances are you have a 403b retirement plan. This type of retirement account offers many benefits, including tax advantages and potential employer contributions. However, there may come a time when transferring your 403b to an Individual retirement account (IRA) becomes a viable option. In this article, we’ll explore when it makes sense to make this switch.

1. Leaving Your Current Employer: When you switch jobs or retire, you typically have three options for your 403b account: leave it with your former employer, roll it over to your new employer’s retirement plan if they allow it, or transfer it to an IRA. If you’re not satisfied with the investment options provided by your former employer’s plan or if you prefer to have more control over your investments, moving your funds to an IRA might be a wise decision.

2. Greater Investment Choices: 403b plans are often limited in terms of investment options. They usually offer a selection of mutual funds, annuities, and fixed accounts. On the other hand, IRAs provide a wide range of investment choices, including stocks, bonds, ETFs, mutual funds, and even alternative investments like real estate or precious metals. If you desire more flexibility and diversification in your portfolio, transferring your 403b to an IRA can give you the freedom to make those choices.

3. Lower Fees and Costs: Another factor to consider when deciding to transfer your 403b to an IRA is the fees and costs involved. Some 403b plans may have higher administrative fees and expense ratios on investment options compared to what you would find with an IRA. By moving your funds to an IRA, you can potentially reduce costs and keep more of your hard-earned money for retirement.

4. RMD Flexibility: Required Minimum Distributions (RMDs) are mandatory withdrawals you must take from your retirement accounts, including 403b and IRAs, when you reach a certain age (usually 72). However, there are different rules regarding RMDs for 403b plans compared to IRAs. If you’re still working at age 72 and have a 403b, you may be allowed to delay taking RMDs until you retire, as long as you don’t own 5% or more of your employer. With an IRA, RMDs must start by age 72, regardless of employment status. Depending on your retirement plans and RMD preferences, transferring your 403b to an IRA might offer more flexibility.

5. Simplify Your Finances: Consolidating retirement accounts can simplify your financial life. If you have multiple retirement accounts from different employers, keeping track of them, managing investments, and planning for retirement can become a tedious task. By transferring your 403b to an IRA, you can bring all your retirement funds under one umbrella, making it easier to monitor and manage your retirement savings.

Before making any decisions, it’s important to carefully review your specific circumstances and consult with a financial advisor or tax professional. They can help you consider the tax implications, potential penalties, and any employer-specific retirement benefits associated with your 403b plan. Deciding when to transfer your 403b to an IRA is a significant financial step, so take the time to evaluate the options and choose what’s best for your retirement goals and future financial security.