Transferring 403b’s?: Here’s What You Need To Know

Are you currently contributing to your 403(b) plan at your employer? Have you recently received a letter from your employer in regards to the changing regulations that are occurring in the New Year for 403(b) providers? Did you receive this letter and are now even more confused in regards to your 403(b) going forward? If this is the case for you, don’t worry, you’re not alone. Due to recent change to 403(b) plans facing new regulations, employers are currently scrambling to review their 403(b) options and have until the end of the 2007 calendar year to make these choices.

403b Changes Are Coming

Currently as it stands, the current provider that you are using to defer portions of your salary into your 403(b) may not be available come the New Year. Here recently I had a teacher that was utilizing AIG Valic for her 403(b) provider for the last 20 years. Currently that insurance carrier has come under scrutiny amongst the recent market bailout, and the client no longer feels comfortable keeping her investments with them. Do you blame her? Trying to find a solution for her to transfer out the money from her current provider to a new one was a daunting one.

Transferring a 403b? Not like It Used to be

 
The way it worked in the past was if you wanted to switch 403b providers, you would just fill out the forms and initiate a 90-24 transfer. It was almost simple as doing a 401k rollover. Unfortunately, today that was not the case. First, I started with the current providers that were approved through the school district (each school district has their own providers that they have allowed into the system). Of those, I only found a few that would even accept transfers. Many of the others were getting out of the 403b business.

Confused yet? I was

This is where it got really confusing. To transfer to the new company, they either had to be on the approved list or have an information sharing agreement signed. What made things even more difficult is that the school district still had not made a decision on what direction they were going for the new year, so they had little help in offering what their employee could do. Upon several phone calls and many conflicting answers, we finally were able to make transfer complete.

5 Steps to Transfer Your 403b

If you are in the current situation with your 403b provider and are looking to transfer out follow these steps:

  1. Contact your school district head office and get a list of the current 403b providers.
  2. Contact those providers and see if they will accept 90-24 transfers.
  3. Double check with the school district that they will be using that provider going forward
  4. Fill out paperwork properly (Double check this because one mistake will delay the transfer for weeks)
  5. Make a copy of the paperwork for your records.

Good Luck! You will need it.

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