Before any 403(b) rollover form is signed, Green State Credit Union sorts your balance into pre-tax, Roth and after-tax dollars, since each type can move to its own account without tax. A direct rollover, with the check payable to the new custodian, isn't taxed; a check made out to you carries 20 percent federal withholding and a 60-day deadline to redeposit the full amount, including the part that was withheld.
Most teachers start looking after a shift that makes last year's plan feel shaky. Markets drop, a rule changes, a vendor sends a letter about new fees, and an old annuity from your first district suddenly looks like something you never chose. Often you didn't. You signed up in your twenties and never opened the statement again.
This page isn't for you if you're still teaching and under 59½ with a plan you like. Have your latest 403(b) statement nearby, the one that lists money sources, because the rest of the page keeps coming back to it. Investing carries risk, and you can lose money, including some of what you roll over.
What does a 403(b) rollover move, and who usually needs one?
A 403(b) rollover moves money from a district plan, either an annuity contract or a custodial mutual fund account, to an IRA or another employer plan. Done as a direct trustee-to-trustee transfer, nothing is withheld and nothing is taxed.
Our first step is dull but it matters. Green State Credit Union reads the money-source breakdown on your statement and writes down how much is pre-tax, Roth 403(b) and after-tax, because each has a different tax-free destination.
Most people who need this have left the district or retired. They hold an older annuity contract, several vendors from different schools, or after-tax contributions from years ago. Some plans allow an in-service rollover at 59½ while you're still teaching; the vendor's plan document says whether yours does.
A rollover by itself saves no tax. It changes costs, fund choices and what you can do later. Converting pre-tax money to a Roth IRA only moves the tax bill to this year.
Leaving an old 403(b) alone has a price
On $640,000, a contract that costs 1.2 percent more per year than a broad index portfolio costs $7,680 per year ($640,000 × 0.012), and the menu often limits you to the vendor's own funds. Think of it like a leaky roof you keep patching: each season looks cheap, the total doesn't. But waiting is sometimes right. A surrender schedule about to end, or penalty-free access under the age-55 rule, can make next year the better year to move.
After-tax dollars in an old 403(b) annuity can land in a Roth IRA
Take a hypothetical couple, Kenji and Agnieszka, 61 and 58. He's a high-school band director with a state pension and a $640,000 403(b) annuity. She's a district payroll specialist with a 457(b). Kenji's statement shows $40,000 of after-tax contributions inside that contract (surrender charges have their own page, so set them aside here). One tidy rollover into a single traditional IRA looks like the obvious move.
It costs money. The $40,000 becomes basis, recovered a sliver at a time: $40,000 ÷ $640,000 is 6.25 percent of each withdrawal. Its growth is taxed. Assuming 5 percent a year, for illustration, $40,000 grows to about $65,000 in ten years. At an assumed 15 percent tax rate, the $25,000 of growth costs $3,750.
The rule behind the fix: when a 403(b) pays out a full balance at once, the IRS lets you send the pre-tax part to a traditional IRA and the after-tax part to a Roth IRA, both by direct rollover, with no tax. The instruction has to be on the vendor's distribution form before the money moves. You can't repair it afterward by shuffling IRA money around for free.
Where does the after-tax amount show up? Look at the statement's source list, often labeled "after-tax" or "employee non-Roth", or ask the vendor for a basis figure. Contributions from the 1980s and 1990s are the usual source. Left in a traditional IRA, that basis has to be tracked on IRS Form 8606 every year you take withdrawals.
Kenji and Agnieszka split the rollover: $600,000 to a traditional IRA and $40,000 to a Roth IRA. In the Roth IRA, the growth on that $40,000 is never taxed, and it can be withdrawn tax-free once the Roth IRA is five years old. The money still goes into investments that can fall, and they could get back less than they rolled over.
What Kenji found on the statement
What they decided and why
If your 403(b) statement shows any after-tax (non-Roth) balance, ask the vendor before you sign its distribution form whether it will split a full direct rollover: pre-tax to a traditional IRA, after-tax to a Roth IRA.
Where a rollover hands off to index funds, 457(b) advice and the retirement plan
When the money lands in the IRA, our index fund portfolio service decides how it's invested. That service relies on decades of market evidence and broad diversification, and forecasts play no part. Agnieszka's 457(b) is a separate decision, because its penalty-free access after separation is often worth keeping in the plan; our 457(b) plan advice covers it. The wider teacher retirement planning work sets the timing of withdrawals alongside the pension. Each gets one line here and its own page.
Who doesn't need a 403(b) rollover yet?
You can wait in four cases. One is that you're still teaching and under 59½. Another is that you left between 55 and 59½ and need withdrawals soon, because the age-55 exception belongs to the 403(b) and disappears once the balance moves to an IRA.
The other two are surrender charges that end within a year and a plan that already offers low-cost index funds. Meanwhile, check each fund's expense ratio and update the beneficiary form. Both take an afternoon and cost nothing.
Six questions for whoever moves your 403(b), including Green State Credit Union
Put these to every firm and to the vendor itself. Written answers beat verbal ones.
- Will it be a direct rollover, check payable to the new custodian
- How will after-tax and Roth money be handled
- What will the new account cost per year, in dollars
- What surrender charge applies on the transfer date
- Is anyone paid a commission on the new product
- What happens to my age-55 penalty-free access
Questions about 403(b) rollover
My vendor's distribution form has a box for after-tax contributions: what should I put there?
Enter the after-tax amount shown on your statement's source list and tell the vendor to send it to a Roth IRA by direct rollover, with the pre-tax balance going to a traditional IRA. Ask the vendor to confirm the split in writing before it processes the form, since it can't be fixed afterward.
When does the 60-day clock start if my 403(b) check was mailed to my house?
The IRS 60-day clock starts the day you receive the distribution, not the day the vendor mailed it. Keep the envelope and the check stub. You must redeposit the full amount, including the 20 percent that was withheld, or the shortfall counts as taxable income.
At what age can I take money from a rollover IRA without the 10 percent penalty?
The 10 percent early-withdrawal penalty on IRAs generally ends at 59½. The age-55 exception for leaving a job applies only to the 403(b) itself and is lost once the money is in an IRA, so if you need withdrawals between 55 and 59½, leaving it in the plan may be better.
Does a direct 403(b) rollover raise my income for Medicare premium purposes?
A direct rollover to an IRA isn't taxable income, so it doesn't raise the income Medicare uses to set IRMAA, which looks at your tax return from two years earlier. A Roth conversion or a check made out to you can raise it, so keep those separate.
Can I roll my 403(b) into an IRA at 59½ while I'm still teaching?
Only if your plan allows in-service rollovers. Some do at 59½, others don't permit any until you leave the district. The vendor's plan document answers it, so ask for the document by name and request the rule in writing before planning around it.
Is this the right year for your 403(b) rollover?
Find your own age in the first column and read across to the rule that's about to switch on. The 10 percent penalty and Medicare figures come from the IRS and Medicare rules; the catch-up amount is the IRS limit for 2026.
One mistake pairs two moves. Someone asks the vendor to make the check out to them and then redeposits only what arrived. On a $100,000 distribution, $20,000 is withheld, only $80,000 goes into the IRA within 60 days, and the missing $20,000 becomes taxable income: about $3,000 at an assumed 15 percent rate, plus a $2,000 penalty for someone under 59½ without the age-55 exception. That's $5,000 in all, and that $20,000 is out of tax deferral for good.
To start, fill in the online request form here (no phone number is published), and we'll set up an intro call by video or phone. Bring the latest 403(b) statement showing money sources, the vendor's distribution packet and your spouse's plan statement. You'll get the exact cost in writing and sign off on it before Green State Credit Union does any work.
Green State Credit Union serves 377,000 clients and $6.7 billion in client assets as of 10/19/2026; the client minimum is $500K in investable assets. A rollover doesn't lower the tax owed on pre-tax money, so some teachers are better off leaving the 403(b) where it is for now.
| Age | Rule that switches on | What it means for a rollover |
|---|---|---|
| 55 (year you separate) | No 10% penalty from that 403(b) | Rolled to an IRA, the exception is lost |
| 59½ | 10% penalty ends for IRAs and plans | Rollover no longer limits access |
| 60 to 63 | Plan catch-up rises to $11,250 | Only matters while still contributing |
| 65 | Medicare; IRMAA set by return two years back | A direct rollover adds no income |
| 67 | Full Social Security age (born 1960+) | Withdrawals may bridge until benefits start |
| 73 or 75 | RMDs begin (75 if born 1960+) | Same start age in a 403(b) or IRA |
A rollover by itself saves no tax. What it changes is cost, choice and what you can do next.
Where the rules come from
Related Green State Credit Union services
This is general information, not personalized investment, tax, or legal advice. Investing involves risk, including loss of principal. Before making decisions about your retirement or investments, consult a qualified professional about your own circumstances.