403(b) Options at Retirement: Rollovers, Withdrawals and Annuities

Your 403(b) options

The same broad choices as a 401(k), with one difference worth knowing: many 403(b)s are already annuity contracts.

Leave it in the plan

You keep the plan's investments or annuity contract. Check what the plan allows once you've left: some limit how often you can take money out.

Roll it into an IRA

A direct rollover moves it into an IRA in your name, with no tax due. It widens your choices and lets you set your own income schedule.

Take withdrawals

Withdrawals are taxed as ordinary income. Before 59½ a 10% penalty can apply, unless you left that employer in or after the year you turned 55.

Take income from the contract you have

If your 403(b) is an annuity contract, it may offer guaranteed income options, or a guaranteed minimum interest rate worth keeping. Find out before you move it.

Move part of it into guaranteed income

Roll part of it into an annuity held as an IRA, for protection from market drops, a locked-in rate, or a set income for life, and keep the rest invested.

What to check before you move it

Surrender charges. Some 403(b) annuity contracts charge a fee for moving money out in their early years. Ask for the current surrender schedule before you request a rollover.
A guaranteed rate you'd give up. Older contracts sometimes guarantee a minimum interest rate that's hard to find today. That can be a reason to keep part of the money where it is.
A 457(b) beside it. Money in a governmental 457(b) has no 10% early-withdrawal penalty at any age once you leave that employer. Roll it into an IRA and that advantage is gone, so check before you combine accounts.
Your pension. If you have one, part of your income is already guaranteed for life. The real question is how much more guaranteed income you need, if any.
Required minimum distributions. They start at 73, or 75 if you were born in 1960 or later.

403(b) questions

Can I roll my 403(b) into an annuity?

Yes. A direct rollover into an annuity held as an IRA keeps the money tax-deferred, with no tax on the move. Check your current contract's surrender charges first.

My 403(b) is already an annuity. What does that mean?

Many 403(b) plans, especially in schools, are held in annuity contracts from insurance companies. They can be fixed or variable, and some carry surrender charges or guaranteed minimum rates. A review can show you what you have before you decide anything.

How much income could my 403(b) give me?

It depends on your balance, your age when income starts, any pension you'll receive, and the option you choose. The assessment gives a licensed professional what they need to show you real numbers.

See what your 403(b) could pay you each month

Five quick questions, about a minute. Then, if it's useful, a free income review with a state-licensed professional.

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Free · No obligation · Educational only · Not tax advice