Rollover to Roth from TIAA?

[Enterprise D]

My wife and I are retired (no income from work) with investments in my TIAA and TSP accounts and her traditional IRA with Penn Mutual and her Roth IRA with Vanguard. I would like to open a Roth account with TIAA and roll over some of my TIAA money into it. All contributions were paid by my employer (a University). I am aware we would have to pay taxes on the money we move into the Roth. However, we expect to have to pay a higher rate of tax in the coming years after we take RMDs, so it seems worth considering paying a lower tax rate this year on some of the money.

I was unsure if I qualified to open a new Roth IRA when I was no longer working, but a TIAA advisor told me I can open a Roth and it would be OK to roll over funds from my employer-sponsored TIAA retirement accounts. I had also thought I might have to first open a traditional IRA and rollover to it and then to the Roth, but apparently, this is not necessary.

I am asking 1)if anyone is aware of any reason (i.e. regulations etc.) I should/could not proceed with the Roth; 2) if others have done this type of roll-over and what difficulties or unanticipated problems (if any) were encountered.

I appreciate anyone sharing their experience and/or comments. I have been learning from this website for many years, and offer my thanks to those who founded and nurtured this project!

[mhalley]

The only possible gotcha is that some plans do not allow partial rollovers, it's either all or none. You would need to check your plan documents or call to see if partial rollovers are allowed. Also, be aware that rollovers to Roth count as income for aca subsidies and irmaa calculations.

[crefwatch]

Some people have found it smoother to open an IRA at TIAA first, and rollover to the IRA before doing a Roth Conversion. That's what I did fifteen years ago, but I "wanted" an IRA anyway. Part of the problem is TIAA's clunky procedures, part of it is the differing regulation of 403(b)s and of IRAs.

Edit: There are a few TIAA employers with very paternalistic rules that they (NOT TIAA) impose about withdrawals or rollovers. You might ask HR, or older colleagues about their personal experiences, before you begin this process.

[ResearchMed]

Some people have found it smoother to open an IRA at TIAA first, and rollover to the IRA before doing a Roth Conversion. That's what I did fifteen years ago, but I "wanted" an IRA anyway. Part of the problem is TIAA's clunky procedures, part of it is the different regulation of 403(b)s and of IRAs.

We also have done this, very recently.

We had an opportunity to remove some Employer-contributed money from the 403b (due to part-time status) for the first time ever, so we moved a chunk into a new TIRA at TIAA.
["We" means I was handling this, but for DH's account. Retirement accounts cannot be shared accounts. I'll do the same for my smaller 403b later.]

Then we opened another Roth IRA, at TIAA, and moved some of the new TIRA money into the Roth, withholding taxes at that time.
I'm pretty sure we could have directed money from the 403b directly to the Roth, without using a TIRA. However, keeping some of the money in a TIRA allows us to decide when to use taxable withdrawals, in terms of taxes and future IRMAA payments, etc.

Note: We pay all of our taxes by withholding, so no quarterly tax payments are ever needed.

Although the TIAA Roth was "new", each of us already has a Roth opened. The Roth "clock" starts from the date each person's *first* Roth was opened.

I'm not sure why you are asking about whether you can open a Roth when you are no longer working. Roths are not employment-linked the way 403b/401k/etc., type accounts are.
If you want to bypass the TIRA, then just pay taxes when you move the money from the 403b account to the Roth instead of when you move the money from a TIRA to the Roth.

But do double check about what crefwatch mentioned... are there any restrictions you need to deal with about removing money from *your* 403b.

RM

[Odie3of4]

RM and crefwatch make good points about checking with your former employer about what your plan allows. I've done Roth conversions for several years now straight from my 403b to a Roth IRA I opened with TIAA after retirement. My TIAA "Wealth Management" team helped me with it, and sent me the form I needed to submit. Since my plan is an ERISA plan, I need to get a notarized spousal waiver every time I do a conversion. I have converted employer contributions with no trouble. Also, if you're not having taxes withheld, be sure to check the appropriate box, and if relevant, include instructions to TIAA to not withhold state taxes (there is no box to check for state taxes and TIAA will automatically withhold unless you tell them not to).

[Enterprise D]

Thanks to everyone for your replies!

[Call_Me_Op]

Note that if you have no other Roths, I believe you will need to wait 5 years before you can withdraw the gains from the Roth tax free.

[ResearchMed]

Note that if you have no other Roths, I believe you will need to wait 5 years before you can withdraw the gains from the Roth tax free.

Note that this refers to any *gains*.

You can always remove any contributions without tax or penalty.
And if you are over 59.5, you can also remove any conversions without tax or penalty.

See the multicolor chart part way down the page on this Wiki link:
https://www.bogleheads.org/wiki/Roth_IRA

As for needing to pay tax on earnings, well... if you didn't have that money in a tax-free account, you'd be paying taxes on those earnings anyway.
(There might not be a huge amount of earnings in less than 5 years anyway...?)
And if you are over 59.5, there is no penalty for removing the earnings, although taxes would still be due if it was less than 5 years since opening your *first* Roth IRA account.

RM