Switched jobs: What to do with 403b from last job?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
katnok
Posts: 171
Joined: Fri Nov 11, 2011 8:36 pm

Switched jobs: What to do with 403b from last job?

Post by katnok »

Switched jobs a couple of weeks ago, so debating the options regarding my 403b from my last job. My current situation is as follows:

- MFJ / Age: 43 and 39
- 24% marginal tax bracket (expected to go down to 22% next year due to lower salary)
- Have ~$325k in 403b (Standard retirement services)
- Have a Traditional IRA, which I have been using for backdoor Roth for the last 7 years. So, it usually has no money in it.
- Have 401K (Fidelity) with new employer and allows rollovers
- 403b account is charged 0.8%/year in admin fees, but 401K from new employer has no such charges.
- Fund options are similar in both (I have been using a VG target date fund, which is available in 401K as well)

I believe I have 4 options as to what to do with the money in 403b (please let me know if there are other options):

1. Leave it with the old employer (I don't prefer this option due to 0.8%/year admin fees which is separate from expense ratios)
2. Roll it over into Traditional IRA (I would prefer this option, but it complicates the ability to do backdoor Roth)
3. Rollover into new employer's 401K (not a bad choice, but fund options could potentially change in future or new fees could be established)
4. Cash it all out by paying 10% penalty and taxes (I'm sure nobody would recommend this option for obvious reasons)

What would you guys recommend and why?

Thanks in advance.
BluesH
Posts: 91
Joined: Mon Nov 19, 2018 1:31 pm

Re: Switched jobs: What to do with 403b from last job?

Post by BluesH »

If you don't want to do #2 because of backdoor Roth, then it seems the only reasonable option is #3. Yes your new employer's 401K could change, but it's the better bird in hand. Do you think it's likely to change to be worse than #1?
02nz
Posts: 5565
Joined: Wed Feb 21, 2018 3:17 pm

Re: Switched jobs: What to do with 403b from last job?

Post by 02nz »

+1 to the response above.
Post Reply