Next year I'm going to have to take money out of my 403b (TDA retirement account) to pay taxes on it. Is there a retirement or investment account I can transfer my money to so that I don't have to pay taxes on it? Thank you for replying.
Gwendolyn B
[email address removed]
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A 403(b) plan (also called a tax-sheltered annuity or TSA plan) is a retirement plan offered by public schools and certain 501(c)(3) tax-exempt organizations.
Most pre-retirement payments you receive from a retirement plan or IRA can be “rolled over” by depositing the payment in another retirement plan or IRA within 60 days.
So how do you do a "roll over". There are three ways:
So you can avoid the immediate income tax impact by rolling the 403 (b) over. A direct rollover or trustee-to-trustee transfer, if available, are the best options as there would be less work on your part.
Also if you are taking the money out and not rolling it over you will have income tax implications. As to what investment vehicle to put it in, this is best left to the investment professionals.
Best of luck with this, and feel free to ask more questions as you get closer,
All the best,
Marc T.
A 403(b) plan (also called a tax-sheltered annuity or TSA plan) is a retirement plan offered by public schools and certain 501(c)(3) tax-exempt organizations.
Most pre-retirement payments you receive from a retirement plan or IRA can be “rolled over” by depositing the payment in another retirement plan or IRA within 60 days.
So how do you do a "roll over". There are three ways:
So you can avoid the immediate income tax impact by rolling the 403 (b) over. A direct rollover or trustee-to-trustee transfer, if available, are the best options as there would be less work on your part.
Also if you are taking the money out and not rolling it over you will have income tax implications. As to what investment vehicle to put it in, this is best left to the investment professionals.
Best of luck with this, and feel free to ask more questions as you get closer,
All the best,
Marc T.
Hello JO41696,
Thanks for the question regarding your 403b retirement/annuity plan and if you can transfer it to a different type of plan, where you would not have to pay taxes on the distribution.
As you are aware, withdrawals from most types of retirement plans incur income taxes. however, one exception to this rule, is the Roth IRA. You can always withdraw an amount equal to your contributions without paying taxes. Once you reach age 59 1/2, the earnings can come out tax-free as well, as long as the Roth has been established for at least 5 years. There is also not a required minimum distribution from a Roth IRA until the owner, passes away.
Now the 403b annuity plan distribution will be taxed, however the tax you pay on the distribution depends on your tax bracket and whether you made any nondeductible (after-tax) contributions to the plan. If you made such contributions, those wouldn’t be taxed when they came out. For example, if you made $2,000 in after-tax contributions and your retirement account was worth $10,000, then only 80% of your withdrawal would be taxed.
**Note: Most commonly, people do make only deductible (pretax) contributions to their plans, so their entire distribution becomes subject to income tax at their marginal tax rate.
Hopefully this helps!!
Thanks,
Terri
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