How to roll over a 403(b) to an IRA
If you’re changing jobs or retiring from the public sector, you may be considering what to do with your 403(b) retirement account.
One option is to roll it over into an IRA, or individual retirement account. There are several reasons to consider rolling over a 403(b) into an IRA such as consolidation, more investment choices, and little to no fees. All of these can potentially give you greater control over your retirement savings.
In addition, you may be required to transfer your 403(b) account after you leave your employer, and an IRA could potentially be the most advantageous option.
In this post, we’ll explain what a 403(b) and IRA are, the reasons behind a roll over, and the information you’ll need to conduct one.
What is a 403(b)?
A 403(b) is a type of retirement savings plan that is similar to a 401(k) but is available only to employees of certain non-profit organizations including schools, universities, churches, and hospitals.
In other words, a 403(b) is for some public-sector employees and employees of some tax-exempt organizations.
Rollovers on M1 are easy, allowing you to seamlessly transfer funds from your 403(b) account into an IRA and simplify your retirement plan.
A 403(b) plan allows employees to take payroll deductions to contribute a portion of their pre-tax income to the plan, which grows tax-free until it is withdrawn in retirement. Employers may also match employee contributions.
For the 2026 tax year, the maximum contribution you can make to a 403(b) plan is $24,500, up from $23,500 in 2025. There may be penalties for withdrawing money from the account before age 59 ½, although you won’t pay a penalty for a 403(b) rollover.
What is an IRA?
An IRA, or individual retirement account, is a retirement savings account that you can open with a brokerage firm or other financial platform.
On M1, we offer traditional IRAs, Roth IRAs, and SEP IRAs.
What is a 403(b) to IRA rollover?
A 403(b) to IRA rollover is the process of transferring funds from a 403(b) retirement plan to an IRA.
Why roll over a 403(b) to an IRA?
There are several reasons why you might want to roll over a 403(b) to an IRA, including the following:
New job or retirement: You may have left your public-sector job that was offering a 403(b) and now need to explore other retirement options.
Consolidation: If an individual has multiple retirement accounts from previous employers, consolidating them into a single IRA can simplify their retirement savings strategy and make it easier to manage.
More investment choice: 403(b) plans may have limited investment options, as they can only contain mutual funds and annuities, which are chosen by your employer. On the other hand, IRAs typically offer a wider range of investment choices, including stocks and exchange-traded funds (ETFs).
Lower to no fees: Some 403(b) plans may have higher fees and expenses than IRA accounts, which can potentially diminish investment returns over time. By rolling over to an IRA, an individual may be able to reduce their fees and potentially earn more on their investments. Check your plan documents to see how much you’re paying in fees and determine whether a 403(b) rollover could help you save.
What are the differences between a direct vs. indirect transfer?
When it comes to rolling over your 403(b) to an IRA, there are two transfer methods: direct and indirect transfers. In some cases, clients may not have a choice in transfer method as it is dependent upon the employer the 403(b) is coming from and the financial platform it is going to.
| Direct Transfer | Indirect Transfer | |
| Delivery | Your plan administrator handles the transfer of the account. The assets are transferred directly from your 403(b) to your IRA account. | An indirect transfer is when you receive a distribution from your 403(b) account and then deposit it into an IRA account within 60 days. |
| Tax Considerations | Avoids potential penalties that could occur if you were to make a mistake handling the transfer yourself. | Subject to potential penalties if you don’t complete the rollover within the 60-day time limit. |
| Limitations | No limit to the number of direct transfers allowed within a 12-month period. | Only one indirect transfer is allowed within a 12-month period. |
Be sure to consider all your available options and the applicable fees and features of each before moving your retirement assets. A rollover is only one of your options for your retirement account, please see IRS guidance about rollovers for additional details/considerations.
Are there potential penalties for an indirect transfer of a 403(b) to an IRA?
In certain situations, penalties and income taxes may apply when rolling over your 403(b) to an IRA.
If you chose for an indirect transfer and fail to complete the rollover in the 60-day window, you may subject to a 10% penalty if you are below 59 ½.
The IRS may waive the 60-day deadline if the deposit was delayed by circumstances beyond your control.
The 403(b) plan may also withhold 20% of your savings for federal income taxes in the case of an indirect rollover, although this does not apply to direct rollovers.
How to roll over a 403(b) to an IRA
Rolling over a 403(b) to an IRA generally follows the same core steps regardless of which brokerage or financial platform you choose. Here’s what the process typically looks like:
- Choose the type of IRA you want to roll into
Before initiating a rollover, you’ll need to decide whether a traditional IRA or a Roth IRA is the right fit.
Traditional IRA: If your 403(b) contributions were made pre-tax, a traditional IRA is typically the most straightforward rollover destination. The funds generally transfer without triggering a taxable event, though individual tax situations vary, and continue to grow tax-deferred until withdrawals begin in retirement.
Roth IRA: You can also roll a pre-tax 403(b) into a Roth IRA, but the converted amount will be treated as taxable income in the year of the rollover. Some investors choose this option if they anticipate being in a higher tax bracket in retirement or prefer tax-free withdrawals later.
Consult a tax advisor before choosing which option best suits your needs. - Open an IRA if you don’t already have one
If you don’t have an existing IRA, you’ll need to open one with a brokerage firm or financial platform. When comparing providers, consider factors like available investment options, account fees, and the tools offered to manage your portfolio
- Contact your 403(b) plan administrator
Reach out to your current 403(b) plan administrator — typically your employer’s HR or benefits department — and let them know you want to initiate a rollover. They will provide the required paperwork and walk you through their specific process.
Key questions to ask:
a. Does the plan support direct transfers, or will the distribution be sent to you as an indirect rollover?
b. Are there any surrender charges, exit fees, or waiting periods associated with the transfer?
c. What information do they need about the receiving IRA (account number, custodian name, mailing address)? - Request a direct transfer whenever possible
A direct transfer — where the funds move straight from your 403(b) to your IRA custodian without you touching the money — is generally the preferred method. It avoids the 20% federal tax withholding and the 60-day deadline that apply to indirect rollovers. Not all plans offer a direct transfer option, so confirm with your plan administrator.
- Select your investments in the new IRA
Once the funds arrive in your IRA, they may sit in a default cash or money market position until you invest them. Review your IRA’s investment options — which can include individual stocks, ETFs, mutual funds, and bonds — and allocate the funds based on individual retirement goals and risk tolerance.
- Confirm the rollover is complete
After initiating the transfer, follow up with both your 403(b) plan administrator and your IRA provider to confirm the funds have arrived. Processing times vary, but most direct rollovers are completed within two to four weeks. Keep copies of all rollover paperwork and account statements for your tax records.
Important: A rollover is only one option for your former employer’s retirement plan. Depending on your situation, you may also be able to leave the funds in your existing 403(b), transfer them to a new employer’s plan, or take a cash distribution (which may be subject to taxes and penalties). Review all available options before making a decision. See IRS guidance on rollovers for additional details.
If you’re rolling over to M1, follow the step-by-step instructions below.
How can I roll over a 403(b) to M1?
- Open an M1 IRA (Traditional or Roth IRA)
- Contact your plan administrator to initiate the direct rollover to M1
- Provide the M1 IRA details to your plan administrator:
- Make check payable to: Apex Clearing
- Memo: Your full name and M1 IRA account number
- Mail to:
- Apex Clearing c/o BPO, 350 North St. Paul Street #1300, Dallas, TX 75201
- Prepare your M1 IRA for the rollover:
- Review your IRA portfolio and confirm your investment selections.
- Turn on auto-invest if you want incoming funds to be automatically invested.
- Allow 14 days for mail delivery before contacting M1 for assistance
Please visit our help center for additional resources and information on rolling over your 403(b) to M1.
The M1 line
Whether you’re changing jobs or retiring, a rollover can offer some benefits, such as consolidation, more investment choice, and little to no fees. However, it’s important to understand the transfer process and potential risks involved before making any decisions.
Rolling over a 403(b) retirement account to an IRA can potentially help maximize your retirement income and achieve your long-term financial goals.
Disclosures:
M1 and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
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