My firm LPL Financial is changing its policies on 403b accounts. This change is in accordance with the new IRS regulations on 403b plans. Whether a client of LPL Financial or not, your 403b may fall under the same policy. You may want to double check with your employer or 403b provider to see how this affects you.

Statement from LPL Financial:

Effective January 1, 2009 all withdrawals from every PTC custodial 403(b)(7) account will require an employer signature.  This requirement is due to the IRS issuance of the finalized 403(b)(7) regulations meant to increase the amount of employer involvement in 403(b)(7) plans.  Note that this requirement is currently effective for ERISA 403(b)(7) plans.

Qualifying Events For Rolling Over Your 403b

If a qualifying triggering event has occurred, clients may want to consider rolling their non-ERISA 403(b)(7)* account balances into an IRA during 2008 to avoid the need of obtaining an employer signature for future withdrawals.  Qualifying triggering events are defined by the 403(b)(7) plan document or 403(b)(7) custodial agreement.  Common triggering events include:
• Separation from Service
• Death
• Disability
• Attainment of age 59 ½

Before 1987? Consider this:

Clients in 403(b)(7) accounts with pre-1987 contributions may wish to maintain the assets in a 403(b)(7) account and not roll into an IRA.  Pre-1987 balances receive favorable tax treatment on distributions of after-tax contributions.  Pre-1987 balances may also have the Required Minimum Distribution (RMD) deferred to age 75 instead of 70 ½.  Additionally, 403(b)(7) clients who are over age 70 ½ and still working may wish to maintain the assets in a 403(b)(7) account and not roll into an IRA since RMDs may be postponed beyond age 70 ½ if the participant is still working for the employer that sponsors the 403(b)(7) plan.  Lastly, clients who separate from service after age 55 but have not yet attained age 59 ½ may wish to maintain the assets in a 403(b)(7) account since penalty free withdrawals are permitted in this circumstance.  Clients should consult with a qualified tax-advisor if the above situations apply to them.

See Also:

My Journey To Millions: IRS Backs Off 403b Regulations


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