Rolling Linda’s 403b into an Roth IRA was a bit of a learning experience for me. I did this at the same time that I was rolling my 401k over at Zecco, so I just assumed that they would work pretty much the same way. Turns out I was wrong.
It would have been a bit easier if I could have directly rolled the 403b into a Roth IRA, but instead I had to roll it into a Traditional IRA and then convert the Trad. IRA to a Roth IRA.
Just FYI, a 403b is basically the not-for-profit equivalent to a 401k. So if you work at a church, school, charity, etc you will likely be offered a 403b program rather than a 401k. They are very similar in their goals, but procedurally function a bit different.
I then called Sharebuilder because they have dedicated Rollover Specialists who are there to help you with the process. After talking to one of them, she pointed me to a form that I needed to download and fill out for each 403b that we were rolling over (in our case we had 2).
The form just asks a few simple questions, but the difficult thing is that it needs to be notarized.
Next we called each of the 403b plan administrators to see what paperwork they required.
The first company I called wouldn’t even tell me which forms were needed on the phone. The woman explained it had something to do with some new privacy laws they are upholding. They would only speak to the account owner, so I had to have Linda call them back. They also would not email the forms, they would only send them via snail-mail.
The other company was a bit easier. They did talk to me and actually emailed the forms to Linda’s email address.
The 403b plan administrator forms
After a few days I had received the email and the snail-mail forms that were required to rollover her 403b. Both forms were relatively simple. There were a lot of pages with a lot of sections, but most weren’t applicable to our rollover.
One of the forms needed a notary’s signature and the other required a signature guarantee – which can only be given by a bank, savings association, or credit union. This is not the same as a notary – it holds more weight and is much more difficult to come by. Save yourself some time and frustration and make sure you look to see what you need before sending in your rollover papers.
And one of them required a spousal consent form that needed to be signed by me and a notary.
After you fill out all these forms and get them notarized, they have to be taken back to the employer to get the HR people to sign off on it.
HR Department Sign Off
Apparently 403b rollovers require that you go back to your old employer (this would be real fun if you got fired) and have them sign off on the rollover – and in the case of one of ours it had to get a signature guarantee as well. This is a huge hassle for the employer and I am really surprised that this is required – but it was.
So, thankfully Linda is still on really good terms with her old employer so we dropped the forms off. We knew that it would take a while to get them back as they have to be signed by the designated representative and one of them required that that rep get in his car and drive down to the bank to get a signature guarantee for someone who doesn’t even work there any more. You can imagine how high up on the priority list that would fall.
I think there is some legal limit to how long the employer has to get the paperwork back, but I am not sure what it is.
Regardless we ended up getting the paperwork back in about a week. We then sent the paperwork back to the two respective 403b plan administrators.
Sending Sharebuilder Paperwork
We then faxed the Sharebuilder form to them along with a copy of the most recent statement as they requested.
About 2 weeks later we received statements from both of her former 403b companies showing a zero balance. We checked her new account at Sharebuilder and the money had been deposited into her Traditional IRA.
Converting the 403b to a Roth IRA
Now that the 403b assets were rolled over to a Traditional IRA, we just needed to convert them to a Roth IRA. Sharebuilder makes this fairly simple, but not quite as simple as my Zecco Roth IRA Conversion.
I filled out this form, which was easy enough, but it required a notary to sign off on it. After getting the form notarized we faxed it over to the folks at Sharebuilder. I checked the accounts a few days later and finally the 403b had been converted to a ROTH IRA! Whew! Glad that is finished.
Have you done a 403b rollover yourself? Are you planning on it?