How Do I Rollover My 403(b)?

And should I?

Photo credit: Daniel X. O’Neil, CC BY 2.0.

So one of the items that has been on my financial to-do list for a while is to decide whether I should rollover my 403(b) into my Roth IRA. Or maybe into a traditional IRA. Who knows!

I opened my 403(b) when I worked at a nonprofit; once I left the nonprofit I stopped contributing, but the value of my investments kept growing because that’s how it works.

I opened a Roth IRA last year, and the biggest argument for rolling the 403(b) into the Roth IRA is that I could pay fewer fees on my investments and potentially get a higher return.

Here are some stats:

Roth IRA

Current balance: $5,877.77

Current rate of return: 6.19 percent over three months, 14.70 percent over the past year

Current expense ratio: 0.16 percent


Current balance: $42,793.41

Current rate of return: 5.10 percent over the past three months, 11.30 percent over the past year

Current expense ratio: A lot of different ratios, since my 403(b) is made up of multiple investments (stocks, equities, real estate, bonds, a lot of stuff), but they range between 0.60–0.80 percent

Before I can make this rollover decision, I need to answer four questions:

  1. How do I do this? What are the actual steps?
  2. Should I roll my 403(b) into my current Roth IRA, or open a traditional IRA and roll it there?
  3. Is it a smart move to invest everything into a single low-cost index fund, or should I be spreading my investments across a few different low-cost index funds?
  4. What tax implications should I be aware of?

I’m going to be answering these questions over the next couple of weeks, so I hope they’ll be as useful to you as they are to me! Will I end up rolling over my 403(b)? Let’s find out together.

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