403(b) Rollover Rules for Funding Your IRA
While some retirement savings accounts are more well-known than others, in many cases the retirement account that a person can use actually depends on the type and size of the company they work for. You’ve likely heard of 401(k) plans, as they’re a popular option for employers and employees alike. But there’s another type of retirement account — a 403(b) — that sounds as though it may be similar. It largely is, but it differs in some key ways.
Essentially, 403(b) retirement accounts are the nonprofit sector’s equivalent of a 401(k). They’re only for employees of tax-exempt organizations and public schools. But when an employee transitions out of one of these roles and into the for-profit employment world, they need to be able to keep their retirement savings and collect new earnings in an account that their new employer is eligible to use.
So, what happens to the money in the 403(b) plan? Investors are able to continue investing and saving those funds by rolling over their 403(b) plan into an individual retirement account (IRA), but there’s a specific procedure for doing so. Learn more about it, along with other key details you need to know regarding 403(b) retirement plans.