How Do I Rollover My 403(b)?
Nicole Dieker

  1. Go to Fidelity, Vanguard, TD Ameritrade or any other broker and get instructions on how to do a roll0ver IRA. It is better to make a direct rollover since it reduces tax reporting.
  2. You will need to decide whether to roll it into your existing Roth or open a traditional IRA but from the information you gave it is hard to make a recommendation.
  3. I am assuming you are fairly young and probably still have 30 years to retirement. I would split the money into a large company index (S&P 500), an international mutual fund a small company index (Russell 2000) and a value mutual fund. You can wait til you are in your 50s to move some of the money progressively into a bond fund.
  4. If you the Roth route you will have to pay taxes at your regular income rate on the amount converted so you will need to consider what the additional $40,000 or income will do to your tax liability. The general concept of a Roth is that you put money in today and pay taxes at a lower rate than what you will pay when you retire when you, hopefully, will have more income and be paying at a higher rate. Do note that if your tax rate today is 25% and your tax rate when you begin making withdrawals is also 25% there is no mathematical benefit to one option over the other. If you can, however, rollover to the Roth at a 15% rate and when you retire you expect to be paying at a 25% rate then it is smart to pay now to save later. You can also roll everything into a regular IRA and convert to a Roth in smaller amounts each year that will not make your tax rate jump.

Please note that I am not a professional or consider myself an expert investor. Only you can decide what is right for you (regardless of who may be advising you), but you do have to do some basic math and make some assumptions about your future.

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