Can I convert a 403b to a 457?

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Topic Author
matti
Posts: 121
Joined: Thu Mar 07, 2013 9:17 pm

Can I convert a 403b to a 457?

Post by matti »

Hello.

An earlier thread today comparing a 403b to a 457 gave me pause. I started a 403b when I joined my employer 17 years ago (a public education institution). I had a 457 available but I chose the 403b for no particular reason, as I knew nothing about investing. The aforementioned thread suggests there could be some benefits in having a 457 over a 403b. That begs the question: am I allowed to convert a 403b to a 457?

Any feedback is much appreciated. Thank you.
csmath
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Joined: Sat Oct 13, 2018 11:32 am

Re: Can I convert a 403b to a 457?

Post by csmath »

matti wrote: Wed Sep 23, 2020 7:43 pm Hello.

An earlier thread today comparing a 403b to a 457 gave me pause. I started a 403b when I joined my employer 17 years ago (a public education institution). I had a 457 available but I chose the 403b for no particular reason, as I knew nothing about investing. The aforementioned thread suggests there could be some benefits in having a 457 over a 403b. That begs the question: am I allowed to convert a 403b to a 457?

Any feedback is much appreciated. Thank you.
I think this will answer your question: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
Topic Author
matti
Posts: 121
Joined: Thu Mar 07, 2013 9:17 pm

Re: Can I convert a 403b to a 457?

Post by matti »

csmath wrote: Wed Sep 23, 2020 7:47 pm
matti wrote: Wed Sep 23, 2020 7:43 pm Hello.

An earlier thread today comparing a 403b to a 457 gave me pause. I started a 403b when I joined my employer 17 years ago (a public education institution). I had a 457 available but I chose the 403b for no particular reason, as I knew nothing about investing. The aforementioned thread suggests there could be some benefits in having a 457 over a 403b. That begs the question: am I allowed to convert a 403b to a 457?

Any feedback is much appreciated. Thank you.
I think this will answer your question: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
Well, that was easy! Thank you.
csmath
Posts: 295
Joined: Sat Oct 13, 2018 11:32 am

Re: Can I convert a 403b to a 457?

Post by csmath »

Please note that while you can roll into a 457b... it has to "remain separate" and will not have the same withdrawal rules as a "pure" 457b. You can't move money from a 403b to 457b and gain access to withdrawals once you separate from the employer. Essentially the withdrawal rules are all the same as the original 403b except that you may have different investment options.

Or at least I believe that is how it works!
tibbitts
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Re: Can I convert a 403b to a 457?

Post by tibbitts »

matti wrote: Wed Sep 23, 2020 7:43 pm Hello.

An earlier thread today comparing a 403b to a 457 gave me pause. I started a 403b when I joined my employer 17 years ago (a public education institution). I had a 457 available but I chose the 403b for no particular reason, as I knew nothing about investing. The aforementioned thread suggests there could be some benefits in having a 457 over a 403b. That begs the question: am I allowed to convert a 403b to a 457?

Any feedback is much appreciated. Thank you.
I don't know, but I know my 457 couldn't accept any contributions, rollovers, etc. from any source that wasn't my salary. Probably even if something might be allowed by law it might not be allowed by the terms of your plan.
krow36
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Re: Can I convert a 403b to a 457?

Post by krow36 »

There's another restriction to rolling a 403b into a 457b. The 403b must be from a previous employer. If the 2 plans are with your current employer, it's not allowed. You can transfer your 403b balance to another 403b that's on your employer's 403b vendor list. I guess you realize that you can contribute to both a 403b and a 457b because they have independent contribution limits?
lakpr
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Re: Can I convert a 403b to a 457?

Post by lakpr »

Your post is simply begging the question, why not direct all future investments to the 457 plan? The benefit of the 457 plan over the 403b plan, presumably, is the ability to withdraw from it even prior to age 59.5, if you separate from that employer sponsoring the plan. If that's the benefit that you have in mind, in essence you are trying to create a second tier emergency fund. Never too late to start, you can start now!
Topic Author
matti
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Joined: Thu Mar 07, 2013 9:17 pm

Re: Can I convert a 403b to a 457?

Post by matti »

krow36 wrote: Wed Sep 23, 2020 9:27 pm There's another restriction to rolling a 403b into a 457b. The 403b must be from a previous employer. If the 2 plans are with your current employer, it's not allowed. You can transfer your 403b balance to another 403b that's on your employer's 403b vendor list. I guess you realize that you can contribute to both a 403b and a 457b because they have independent contribution limits?
Thank you. I'm still with the same employer, so it looks like I'll have to leave the 403b as is.
Topic Author
matti
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Joined: Thu Mar 07, 2013 9:17 pm

Re: Can I convert a 403b to a 457?

Post by matti »

lakpr wrote: Thu Sep 24, 2020 6:33 am Your post is simply begging the question, why not direct all future investments to the 457 plan? The benefit of the 457 plan over the 403b plan, presumably, is the ability to withdraw from it even prior to age 59.5, if you separate from that employer sponsoring the plan. If that's the benefit that you have in mind, in essence you are trying to create a second tier emergency fund. Never too late to start, you can start now!
Thanks. I hadn't considered that. I will definitely think about it.
carmonkie
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Re: Can I convert a 403b to a 457?

Post by carmonkie »

lakpr wrote: Thu Sep 24, 2020 6:33 am Your post is simply begging the question, why not direct all future investments to the 457 plan? The benefit of the 457 plan over the 403b plan, presumably, is the ability to withdraw from it even prior to age 59.5, if you separate from that employer sponsoring the plan. If that's the benefit that you have in mind, in essence you are trying to create a second tier emergency fund. Never too late to start, you can start now!
It depends on the plan. My wife's employer offers 403b and 457. The 457 however, is a managed account by an external company. They assess management fees + fund fees and other fees. You can only choose what they offer in their line-up. I calculated it to be 1.25% of the assets. Her 403 is through Vanguard. We are complementing her investments with a Roth IRA, which can bridge us to 59 1/2 if needed and before her pension plan payments.
retiredjg
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Re: Can I convert a 403b to a 457?

Post by retiredjg »

You cannot "convert" a 403b at a current employer to anything at all. It will remain as a 403b until you leave employment (or reach 59.5 in which case some plans will allow you to roll it out).

When you leave that employer, you can do a rollover or a transfer into some other kind of account. However, if you roll to 457, the money does not "become" 457b money. It retains its 403b distribution rules. So no benefit there.

If you are interested in 457, you can stop contributing to 403b and contribute to 457 instead. Actually, you can contribute to both, but I don't recommend it.

Your situation sounds like you might run the risk of putting too much into tax-deferral. If you are using traditional 403b, you might consider Roth 403b or 457 if you have that option, but there is not nearly enough information to consider that a suggestion - just a path to explore.
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