Moving a 403(b) sounds like it should take ten minutes. You fill out a form, the money moves, done. In real life it can feel like trying to get a library book back from someone who does not want to give it up.
Some 403(b) companies make it hard to leave. They forget that the money belongs to you, not to them. The good news is that the process follows the same steps almost every time. If you know the steps ahead of time, you can avoid most of the headaches.
This post walks through how to transfer your 403(b) to another account, one step at a time. We will cover penalties, where your money is allowed to go, the paperwork, and the outside company that has to sign off on it. If you would rather have someone handle it, we will cover that at the end too.
What Is a 403(b) Transfer, Really?
A 403(b) is a retirement savings account for people who work at schools, hospitals, and some non-profits. Think of it like a jar where you drop in part of every paycheck. A 403(b) transfer means you take the money out of one jar and put it into a different jar, without ever spending it.
People move their 403(b) for lots of reasons. Maybe the fees are high, the investment choices are limited, or you left your job and want everything in one place. Whatever the reason, the steps below stay pretty much the same.
Step 1: Find Out If You Can Move It Without a Penalty
Before you move a single dollar, check that you are allowed to move it. Depending on what kind of 403(b) you have, you might get hit with a penalty for leaving.
Annuity and TSA plans can charge you to leave
If your 403(b) sits inside an annuity or a TSA plan, and you have not had the account very long, you may owe a surrender charge. That is a fee the insurance company charges you for taking your money away from them.
Here is a made-up example to show how it works. Say you have $100,000 in an annuity that has a 5% surrender charge in its early years. If you move it, you would lose $5,000 to the company. Every contract is different, so call and ask what your exact number is before you start.
Mutual fund companies usually let you leave for free
If your money is with a mutual fund company like Vanguard, Aspire, or Fidelity, the picture is much nicer. Those accounts are fully liquid, which is a fancy way of saying you can move the money out with no exit penalty.
| Where your 403(b) is now | Penalty for leaving? | Example on $100,000 |
|---|---|---|
| Annuity or TSA plan (newer account) | Possible surrender charge | A 5% charge would cost $5,000 |
| Annuity or TSA plan (older account) | Ask the company, it may be lower or gone | Depends on your contract |
| Mutual fund company (Vanguard, Aspire, Fidelity) | No exit penalty | $0 |
Step 2: Know Where Your Money Is Allowed to Go
Next, figure out your options. This is where a lot of people get tripped up, so read this part slowly.
If you still work for your school district or employer and you are still putting money into the 403(b), you cannot move that money into an IRA. It has to stay inside a plan your employer allows. You can only move a 403(b) to an IRA when you leave your job, or when your employer allows something called an in-service distribution.
An in-service distribution lets you move money out while you are still employed. Each employer decides for itself whether to offer one, and it is usually only open to people over age 59 and a half.
So here is how it breaks down. If you are over 59 and a half and your employer allows it, you can move to an IRA even while you still work there. If you are younger, or your employer does not offer it, you can still move to a different 403(b) provider that your employer approves.
- Still working, under 59 and a half: move to another 403(b) provider your employer allows.
- Still working, over 59 and a half, and your employer allows in-service distributions: you can move to an IRA.
- Left your job: you can move to an IRA or to a new employer’s plan.
Step 3: Open the New Account First
This one is simple, but people skip it all the time. The new account has to exist before it can receive any money. A company cannot accept a transfer for an account that is not open yet.
So go ahead and open your new 403(b) plan, or your IRA, wherever you have decided to move. Get it set up and ready. Think of it as building the new jar before you pour anything into it.
Step 4: Get the Transfer Paperwork
Now you need the transfer form. Where you get it depends on the company that currently holds your money.
Mutual fund companies like Vanguard, Fidelity, and Aspire will accept third-party paperwork. That means you can grab a transfer form from your new provider, fill it out, send it in, and they will move your money using that form. Easy.
Annuity companies are different. Most of them require their own paperwork, and they do not make it easy to find. You might be able to download it online. Often you have to call and ask for it. If they are nice, they will email it. Sometimes they will only mail you a paper copy.
Exchange, rollover, or transfer? Pick the right box
The form will ask you what kind of move this is. The three words sound alike, but they mean different things, and checking the wrong box can slow everything down.
| Word on the form | What it means | Simple example |
|---|---|---|
| Exchange | Swapping one 403(b) for another 403(b) with the same employer | You work at the same school and move from Company A to Company B |
| Rollover | Moving to a different type of account, so the name changes | You move from a 403(b) to an IRA |
| Transfer | Moving from one employer’s plan to another because you changed jobs | You leave District A and your money goes to District B’s plan |
An easy way to remember it: if the letters on the account change, like going from 403(b) to IRA, that is a rollover. If you are staying in the same employer’s plan and just swapping companies, that is an exchange. If you switched jobs, that is a transfer.
Watch the signature section
Once the form is filled out, look closely at the signature area. Some companies want your signature notarized. They do this because they do not like losing your money, and every extra step slows you down. In that case you will need to visit a local bank and have a notary witness you signing.
In some rare cases, the company asks for a Medallion signature guarantee. It is similar to a notary, but it has to be done through a brokerage or an insurance company. Only a handful of banks offer it, and there may not be one near you.
If you run into this, one easy fix is to find an advisor who works with 403(b) plans and ask if they can send in the paperwork for you. Usually you only need to give them the original transfer paperwork and a copy of your driver’s license. They put a green stamp on the form, and you are done.
Step 5: Get Approval From Your TPA
This is the step almost nobody has heard of. TPA stands for third-party administrator. Nearly every school district and most other employers use one to manage the 403(b) plan.
Here is why. Many school districts let employees pick from several 403(b) companies. Payroll cannot keep track of where every little check should go. So instead, they write one check to the TPA, and the TPA sends the money where it belongs. The TPA also signs things on behalf of the district.
That means when a form says it needs your employer’s authorization, do not hand it to payroll. Give it to your TPA.
How to find your TPA
The easiest way is to ask payroll, “Who is my TPA?” If you would rather not ask, try searching online for your school district or employer’s name plus “TPA” or “403(b).”
The three biggest TPAs we see around Washington are Omni 403(b), TSA Consulting Group, and Karuth Compliance. Your employer may use one of those or a different one.
What to send them
Most TPAs have their own set of forms too. Go to their website and look for the 403(b) rollover or transfer forms. They are usually easy to find. Print them, fill them out, and send them back along with the transfer paperwork you already completed.
Once the TPA gets everything, they sign off. Then one of two things happens. A friendly TPA sends the paperwork straight to your new provider. Otherwise, they hand it back to you, and you send it in yourself. It depends on the TPA and even on the person processing your form.
Step 6: The Letter of Acceptance
When the paperwork reaches your new provider, they have to agree to accept the money. They do that with a letter of acceptance.
Some providers ask for a recent statement from your current 403(b) before they will write that letter. This changes from company to company. If they ask, send a statement that is no more than 90 days old.
After the letter is done, your new provider usually handles the next part. They send the transfer paperwork to your current 403(b) company, then wait and follow up for the money to arrive.
Step 7: Follow Up (Nobody Cares About Your Money More Than You)
Here is the honest part. The steps above are what usually happens, but not always. Some new providers follow up once a week. Some follow up every two weeks. It depends on the company and how much they care.
If something is wrong with the paperwork, your current company will often only tell you, not the company waiting for the money. They may send a letter or an email, but it is rarely a top priority for them. So an error can sit there for weeks without anyone noticing.
That is why you may need to step in. Call your new provider to ask for a status update. Call your current company to ask if they need anything else from you. It is your money, and no one is going to watch it as closely as you will.
How long does all this take?
From start to finish, a 403(b) transfer can take anywhere from two weeks to several months. It comes down to how fast every person in the chain does their job. Your TPA, your old company, and your new company all have to move.
The 403(b) Transfer Checklist
Here is the whole process in one place, so you can print it or save it.
| Step | What you do | Who you talk to |
|---|---|---|
| 1 | Check for surrender charges or other penalties | Your current 403(b) company |
| 2 | Learn where your money is allowed to go | Your employer or HR |
| 3 | Open the new account | Your new provider |
| 4 | Get and fill out the transfer form | Your new or current provider |
| 5 | Send the form to your TPA for approval | Your TPA |
| 6 | Get the letter of acceptance | Your new provider |
| 7 | Follow up until the money arrives | Both providers |
Frequently Asked Questions
Can I move my 403(b) to an IRA while I still work for my employer?
Usually not. You can move a 403(b) to an IRA when you leave your job, or if your employer allows an in-service distribution. Those are decided employer by employer and are typically only open to people over age 59 and a half. Otherwise, you can only move it to another 403(b) provider that your employer allows.
Will I pay a penalty to transfer my 403(b)?
It depends on where the money is now. Annuity and TSA plans can charge a surrender charge if you have not held the account long. Mutual fund providers like Vanguard, Aspire, and Fidelity are fully liquid, so you can move out with no exit penalty. Always ask before you start.
What is a TPA and why do I need one?
A TPA is a third-party administrator that manages your employer’s 403(b) plan. Your district writes one check to the TPA, and the TPA sends the money where it belongs. The TPA also signs forms for your employer, so any form asking for employer authorization should go to them.
How do I find out who my TPA is?
Ask your payroll department. You can also search online for your employer’s name with “TPA” or “403(b)” added. Common ones in Washington include Omni 403(b), TSA Consulting Group, and Karuth Compliance.
What is the difference between an exchange, a rollover, and a transfer?
An exchange swaps one 403(b) for another within the same employer. A rollover moves your money to a different type of account, like a 403(b) to an IRA. A transfer means moving from one employer’s plan to another because you changed jobs.
What is a Medallion signature guarantee?
It is a special stamp, similar to a notary, that some companies require on transfer forms. It has to be done through a brokerage or an insurance company, and only a handful of banks offer it. You usually need the original paperwork and a copy of your driver’s license.
How long does a 403(b) transfer take?
Anywhere from two weeks to several months. The speed depends on how quickly your TPA, your old company, and your new company each do their part. Following up on your own can speed things along.
Want Someone to Handle It for You?
If all of this sounds confusing or overwhelming, that is completely fair. It is a lot of moving parts. Our team does 403(b) transfers all the time, and it is somewhat of a specialty for us. We know how to get it done as fast as possible.
Once you tell us to do the transfer and sign the paperwork one time, we take it from there. We follow up until the money lands where it needs to go, and we keep you updated along the way. If you want help, you can schedule a personal meeting with our team here.
Remember that your future depends on what you do today.
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