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Transferring Assets from 403(b)s

Q. My client has asked whether he can transfer money from his 403(b) account to buy years of service in his state retirement system. I seem to recall that you can't transfer money from one plan type to another. Is that correct?

A. Generally, that is correct; however, Section 403(b)(13) was added to the federal income tax code a few years ago, and that paragraph specifically says that 403(b) assets can be transferred to a Section 401(A) state retirement system plan to purchase years of service, as long as the state retirement system permits those purchases. Your client will need to have the purchase of the specific number of years he is buying calculated to determine the dollar amount that should be transferred for the purchase. He will also need to complete the form provided by the retirement system to complete the purchase.

08/04/2015


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