What is the time limit for Rolling Over a 401(k) or 403(b) to an IRA?

Question

My husband is a teacher, and recently changed school districts -- moving from a private school to a public school. He has a 403(b) plan with his old employer. I'm considering rolling it over into an IRA. Is there a time limit on making this decision? (1 or 2 years from now if I decide to roll it over into an IRA, is it too late?)

Follow-up question: when does the clock start ticking for the 90-days? From the last paycheck? Or the last contribution to the 403(b)? In this case -- the last contribution to the 403(b) was about 2 months before the last paycheck from the job.

Answer 1

The time limit is 60 days if he doesn't do a direct rollover. This type of rollover subjects him to the 20% mandatory withholding tax. Also, if you don't rollover the money into an IRA within this time, you would also be subject to 10% (Sec 72(t)) early withdrawal penalty.

Doing a direct rollover allows him to avoid this tax. He would also be able to roll his 403(b) plan into another qualified plan rather than an IRA if the public school offers one (it would more than likely be a 457 plan).

If you want to contact me about any other questions, feel free to do so.

Answer 2

The 60 day rule only applies if your husband has taken a distrubution from the plan (ie, the plan cut him a check for the balance of the account). Assuming the plan is still solvent and being run according the the appropriate governance rules this would have happened only if your husband had a small balance or if he requested the distribution.

If a distribution has not yet occured, your husband can leave the funds in place for as long as he chooses. He might still be vulnerable to the plan no longer meeting governing rules or a forced distribution from the plan. At that point, the 60 day rule would start.

Answer 3

There is no time limit. His old retirement plan will allow him to keep the account open if his balance is larger than $5,000.

That 60 day rule pertains to folks that take a distribution. They have 60 days to put the money back (along with the 20% that was withheld) or they will be hit with a 10% penalty + tax.

Answer 4

You have until the 401(k) administrator goes out of business or the employer forces you out of the original plan. It is only if he is kicked out of the plan that some 90 or 60 day clock starts ticking.

Answer 5

60 TO 90 days.

Answer 6

There is no time limit on making this decision unless the school forces him out of their plan. In that case, he would have 90 days.
Most of the time, you are able to stay in the original plan and usual it is beneficial to do so.

Answer 7

It is 60 days

Answer 8

I think it either 60 or 90 days.

Answer 9

90 days without penalty